Why Japanese Stocks Could Keep Rallying

The Japanese equity market's prospects following Prime Minister Sanae Takeichi's election victory are examined in this conversation with Bruce Kirk, Chief Japan Equity Strategist at Goldman Sachs Research. The discussion centers on how the election results could foster political stability and influence investor sentiment. Kirk points out that historically, similar election outcomes have led to market rallies, with an initial surge followed by multiple expansion driven by increased foreign investment. He also addresses concerns about potential fiscal policy shifts, particularly regarding consumption tax, and highlights the ongoing efforts in corporate governance reform. While acknowledging the substantial gains already seen in the equity market, Kirk suggests that further upside exists, contingent on corporate Japan delivering on expectations of change and achieving ROE improvement.