Government Change in Japan Tempest in a Teapot?

As for the new ruling party’s approach to the United States, Chris Wolf, managing partner and co-CIO at Cogo Wolf Asset Management in San Francisco, says the DPJ “has purposely kept its cards close to its vest in terms of its anticipated relations with the U.S.” Other than saying it “intends to ‘review’ past assumptions of the last 15 to 50 years, and while adding that they’re not anti-U.S., they haven’t said much.”

As for a Japanese stimulus program for the economy, Brown says the DPJ “will be trying to put more money into the hands of consumers and families while at the same time trying to cut the size of government.” Brown suggests that would be a good idea, since “Japan’s public debt is nearing 200% of GDP and its ambitious social policy agenda is quite expensive.” As for the investment implications of the election, Brown believes that the focus on boosting consumer spending will benefit domestic-based companies, especially in sectors like retail, services, and entertainment, and in stocks like Aeon (a supermarket chain) and 7&I Holdings (parent company of the worldwide 7/11 chain).

While Wolf agrees that the DPJ “may follow a ‘cash-for-clunkers’ arc” in its policies, he also thinks that “an aging population and restrictive immigration policies will trump all.”