ISM Associates: Japan Approves $130bn Fiscal Stimulus

ISM Associates: Shinzo Abe's cabinet gives go-ahead to sizeable stimulus package totaling $274bn.
ISM Associates: The Japanese government has approved a large stimulus package worth, in total, $274 billion. Around half of the total package will be made up of fiscal measures and it includes cash handouts to more than 20 million low-paid workers as well as funding for infrastructure projects.
The package is Prime Minister Shinzo Abe's latest attempt to revive his country's sagging economy amid growing concerns that the country's central bank, the Bank of Japan has reached the limit of what it can achieve with monetary policy. Three years of hugely expansionary quantitative easing have largely failed to reinvigorate an economy hampered by weak consumption and lackluster growth.
Exactly how the stimulus package will be funded remains unclear amid the central bank's assertions it will not resort to the use of so-called "helicopter money" but Nagoro Matsuda, Asian market strategist at ISM Associates said that history would come to remember this package as the first of many to come.
"QE hasn't worked, it's just inflated assets bubbles including the market for the government's bonds. The root of Japan's woes lies with its consumers and the government will eventually begin introducing tax breaks to give people more money to spend. It could develop into a very worrying trend," he explained.
Last week, the Bank of Japan disappointed markets after demonstrating none of the largesse for which the central bank has become known. Instead, it elected to leave the door open to the prospect of more monetary stimulus when it reviews its policies in September.
ISM Associates says it has no immediate plans to modify its exposure to Japanese assets at this time