After the BOJ left policy unchanged on Wednesday, the Nikkei 225 fell 5.16% in local terms, which would have been worse without a market holiday on Friday. The currency fared little better. The JPY lost almost 5% against the USD and now sits back at September 2014 levels.
We have been, and continue to be, bears on Abenomics. The “three-arrows” of fiscal stimulus, monetary easing and structural reforms have failed individually and collectively, leading to negative GDP growth in 5 out of the last 9 quarters. We summarise our views by answering three questions:
Why has Japan failed?
What happens next?
What are the takeaways for the rest of the world?
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