Ozawa resignation to have little impact on Tokyo stocks

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TOKYO, May 11 Kyodo -
The sudden announcement by Ichiro Ozawa, leader of Japan's main opposition
Democratic Party of Japan, on Monday that he will step down as party leader may
have sent ripples across political circles but market analysts responded
calmly, noting that the impact of the news on Tokyo stocks will likely remain
limited.
Investors had been anticipating the resignation since Ozawa's top secretary was
arrested in early March over a political funds scandal, although shares of
related companies such as Nishimatsu Construction Co. could lose ground in
trading Tuesday, brokers said.
''Despite its strong position up till early spring, the DPJ's ability to remain
on the offensive has now been undermined, so of course some influence cannot be
denied,'' said Yutaka Takei, senior economist and deputy general manager of the
investment research department at the Shinko Research Institute.
''But it's not like everyone was convinced that Ozawa would soon take power and
is now shocked by his resignation,'' Takei said, stressing there will be no
immediate impact on overall equity prices. ''The market will wait to see who
will become his successor and the new party regime before deciding its
response.''
Reports of Ozawa's intention to resign came just after the closing bell at the
Tokyo market, which extended its winning streak to five consecutive trading
days and renewed a six-month closing high on Monday.
Market analysts said the direct impact will also be slight because the support
ratings for Prime Minister Taro Aso's Cabinet are on a rebound from recent
lows, minimizing concerns about domestic political turmoil.
''What the public desires most right now are additional economic stimulus
measures'' presented by the ruling coalition, said Yoshikiyo Shimamine, chief
economist at the Dai-ichi Life Research Institute.
''What really moves the Japanese economy is not politics but the economic
outlook overseas,'' Shimamine said. ''The resignation announcement is neither
positive nor negative for the market.''
Masami Yamamoto, a market analyst in the global product planning department of
Daiwa Securities SMBC Co., said that given the deep-rooted distrust of politics
among the Japanese public, Ozawa's departure would not cause a stir among
investors.
''Certainly some stocks related to the scandal such as Nishimatsu Construction
may fall, but given that Mr. Ozawa's resignation had been rumored for a long
time and that the impact was already priced in after the scandal first
surfaced, there will be little impact on overall stock prices,'' Yamamoto said.
Market reaction had also been limited back in early March when Ozawa, who until
recently was seen as the leading candidate for next prime minister, was put in
the spotlight after his secretary was arrested on suspicion of receiving
illegal donations from scandal-tainted Nishimatsu.
The secretary has since been indicted on suspicion of violating the political
funds control law.
Ozawa, a former heavyweight of the ruling Liberal Democratic Party, led the
opposition DPJ to a landslide victory against the ruling coalition in the July
2007 House of Councillors election.
With the opposition parties controlling a majority in the upper house, Ozawa
had gained momentum toward a possible victory in the House of Representatives
election to be held by the fall. But some political pundits had predicted that
Ozawa's health problems would prevent him serving as prime minister for a long
time even if he were to lead the DPJ to power.
==Kyodo
2009-05-11 22:30:10