The indexes rose in line with the improving global sentiment, but fundamental issues continue to persist in the Japanese economy, as recent economic figures were rather poor. Q3 GDP growth came in at 0.2% QoQ missing market estimates, November Manufacturing PMI continued to stay in the contraction range, corporate confidence remained weak, industrial production went negative again, and retail figures missed expectations. Overall, the short term economic outlook in Japan remains negative. As we have yet to see significant recovery in the Japanese economy, we retain our neutral rating for the market for the remaining portion of 2019.

That said, it was reported that Japan’s Prime Minister Shinzo Abe ordered its cabinet to compile a comprehensive economic stimulus package for the coming year, amounting to a total of USD 120 billion, which is the first stimulus package since 2016. While some might be concerned over the mounting debt load of the island country, the whole package should provide much needed momentum in the stagnant country. If the plan was adopted and carried out in the coming year, we expect the Japanese economy to further grow benefiting from the governmental support. With Tokyo Olympic Games 2020 held in the country, growth drivers are present in the Japanese economy, the outlook for 2020 is positive.