Tokyo/New York — Japan Prime Minister Shinzo Abe’s election defeat in Tokyo last weekend is a "huge buy signal" for Japanese equities because of the increased pressure on Abe to return to his core task of boosting the economy, says Ed Rogers, head of Rogers Investment Advisors.
The result of the Tokyo assembly elections was a "wake-up call" for Abe to go back to economic reform instead of pursuing constitutional change, Rogers said in an interview with Bloomberg TV.
Rogers Investment is an Asia-focused advisory group that provides funding and support for hedge funds.
Abe’s Liberal Democratic Party suffered a bloodbath in Sunday’s Tokyo assembly elections, winning its smallest number of seats on record in the capital. The initial euphoria over Abe’s pledge to revive the economy ebbed in 2016 with the first decline in the Topix index in five years.
While equities have climbed this year, they are yet to recapture 2015 highs.
Abe "is really sweating it right now, to be perfectly honest", said Rogers, adding that unless Abe refocused his energies, voters could show him the door.
Speaking after the TV interview, Rogers said the victory for Tokyo governor Yuriko Koike was also positive for strengthening her hand for plans to make Tokyo more attractive as a financial hub.
The city government has set up an advisory panel focusing on policies and reforms to attract financial firms.
Tokyo has been losing out as a financial hub due to its regulatory environment, with hedge funds enjoying lower tax rates in Hong Kong and Singapore.
Abe insisted in an interview published on Tuesday that he would press ahead with plans to present the first-ever constitutional amendments to parliament in the next session.
But achieving his ambition of enshrining the existence of the Self-Defence Forces in the top law is looking more remote than previously.