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Japan’s former PM Abe dies after being shot

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SINGAPORE — Former Prime Minister Shinzo Abe, Japan’s longest-serving leader, died on Friday after being shot while campaigning for a parliamentary election.

Abe has remained a dominant presence over the ruling Liberal Democratic party (LDP) party, and is best known for his signature “Abenomics” policy featuring bold monetary easing and fiscal spending.

Following are some reactions from the financial markets:

FRANCESCO PESOLE, FX STRATEGIST, ING BANK, LONDON:

“Yen had a pretty short-lived reaction. It is holding up better than other currencies against the dollar today but I don’t think that’s related to the Abe attack. It’s a risk-off environment so the yen is performing better. It’s incredibly sad news but it seems like an isolated event and also we are talking about a former politician here.”

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STUART COLE, HEAD MACRO ECONOMIST, EQUITI CAPITAL, LONDON:

“His death probably does not signal a change in policy direction. Further, it is more the BoJ that the market is focused on and its policy of yield control. That is more important in driving sentiment towards the Jpy at the moment rather then government policy per se.”

“I guess we possibly could see the LDP gaining more votes now on the back of a sympathy vote, as the public express their revulsion at Abe’s murder by voting for his party? A good performance for the LDP possibly makes it less likely we will see a change made to the BoJ’s loose monetary policy strategy that was very much a feature of the Abe administration and has continued since then.”

CHOI BO-WON, ANALYST, KOREA INVESTMENT & SECURITIES, SEOUL

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“The shadow of ‘Abenomics’ has continued under Kishida’s leadership after Suga. Abe, who supported Kuroda as the governor of the Bank of Japan, has been expected to influence also on Kuroda’s replacement after April next year. There will be growing caution over a possibility of changes in the BOJ’s current accommodative stance. It is time to note that the depreciating pace of the yen may slow down.”

AKI MATSUMOTO, METRICAL EXECUTIVE DIRECTOR WHO PUBLISHES ON SMARTKARMA, TOKYO

“The currency markets will probably postulate that the Abe shooting will hasten the end of Kuroda’s monetary easing, as the BOJ pushed hard during the Abe administration to induce the yen to weaken.

“However, since long-term interest rates have recently been on a downward trend temporarily due to the association with the U.S. recession, the positions in the foreign exchange market were merely waiting for an opportunity to tilt the dollar against the yen.”

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JUSTIN TANG, HEAD OF ASIAN RESEARCH, UNITED FIRST PARTNERS, SINGAPORE

“In the immediate aftermath of the incident, markets were simply making a Pavlovian response in relation to the uncertainty. Given that Abe-san is no longer PM, it is unlikely that this barbaric attack will have a long term impact on the market.”

MIO KATO, TOKYO, LIGHTSTREAM RESEARCH ANALYST WHO PUBLISHES ON SMARTKARMA

“I don’t think there are any major fundamental implications that can be determined… The market dropping and the yen strengthening are probably just that there are some ‘tourists’ investing in Japan because of the weak yen etc. So if this spooks them and they cut back on risk, it would make sense for the market to drop a bit and the yen to strengthen.”

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“Nikkei dropped more than Topix which I generally view as a sign of foreigner risk off.”

MIN JOO KANG SENIOR ECONOMIST SOUTH KOREA AND JAPAN, ING, SEOUL

“The market’s first reaction was more to do with risk sentiment, that’s why the yen saw some temporary strengthening because of its safe haven status, and also it’s going to work negatively for the equity market. It’s too early to judge however whether there are going to be any policy changes as a result of this.”

BART WAKABAYASHI, CO-BRANCH MANAGER, STATE STREET, TOKYO

“I think the yen is just playing its safe-haven role. It’s generally a knee-jerk reaction to buy yen by FX market players who are pretty much ingrained in the way they trade.”

“It’s headline-chasing trading and then waiting for things to settle down later.”

CHARU CHANANA, STRATEGIST, SAXO CAPITAL MARKETS, SINGAPORE

“We saw risk aversion building in with yen gaining on the knee-jerk, and this move may intensify as London gets in. The situation will raise questions about the sustainability of Abenomics, and that could possibly mean a policy shift in Japan.”

(Reporting by Scott Murdoch and Alun John in Hong Kong, Rae Wee and Tom Westbrook in Singapore, Jihoon Lee in Seoul and Sujata Rao and Saikat Chatterjee in London; Editing by Christopher Cushing)

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