Japan Snap Elections Offer a Boost for Equities, History Shows

Abenomics may be about to get a longer lease on life, and that could be good for Japan’s stocks.

Prime Minister Shinzo Abe said he’ll decide on calling a snap election after he returns from an upcoming U.S. trip, confirming reports he was considering a vote more than a year early. Japanese shares generally gain around calls to hold new elections, Nomura Securities Co. strategists led by Hisao Matsuura wrote in a report.

Besides the rationale that a newly elected (or re-elected) set of lawmakers will want to demonstrate returns to its constituents, this time around the potential election offers a fresh show of support for an administration that’s overseen unprecedented economic stimulus. Given the likelihood of a win for Abe, the election could strengthen his hand as he considers whether to reappoint his hand-picked Bank of Japan governor, Haruhiko Kuroda, whose term is due in April.

— With assistance by Kurt Schussler

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