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Tokyo stocks remain lackluster amid concern over economic and corporate earnings prospects and political chaos.

Starting with the Liberal Democratic Party’s April 24 presidential election, the political uncertainty will gather steam in time for the Tokyo Metropolitan Assembly election in June and reach its peak in July for the Upper House poll. In the meantime, ties in the tripartite ruling coalition are expected to become fluid.

Viewed from a longer perspective, however, the Tokyo stock market will probably bottom out shortly.

Fiscal yearend sales to liquidate cross-shareholding ties have run their course, while institutional investors are poised to buy shares with fresh investment funds.

January-March personal consumption data are expected to show a steep year-on-year rise, providing a boon to the quick estimation in June of an annual government report on national accounts.

The U.S. economy appears likely to avoid a hard landing thanks to interest rate cuts and credit-easing. Technical corrections on the Nasdaq market are nearing an end.

In other words, Tokyo stocks are becoming less affected by U.S. stocks. Tokyo stocks are expected to show moderate uptrends in the second half of this fiscal year because inventory adjustments will peak then while expectations of a recovery in corporate earnings will emerge.

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