The terrorist attacks in the United States sent shock waves through stock markets around the world.
The Tokyo market, however, has maintained a relative stability as it was experiencing steeper falls in stock prices than other major markets overseas before the Sept. 11 attacks, while there are lingering expectations of advances in Japan's structural reforms.
The administration of Prime Minister Junichiro Koizumi has kept stressing the importance of structural reforms since its inauguration in April. But a close analysis reveals that the Koizumi Cabinet has done little over the past five months, although time is not on its side.
A timetable of reforms and a package of priority reforms recently announced by the administration may be taken as nothing but an irksome list of sentences written by bureaucrats. They appear to be too general and cover too many subjects. If they are implemented as they are, each reform may end up being implemented haphazardly.
Priority should be given to the disposal of bad loans at banks and reform of fiscal spending. All efforts must be directed to these two issues.
The Koizumi Cabinet continues to enjoy strong public support and will surely push ahead with reforms. But investors should be aware of growing risks, because the chances of bold reforms as expected by the market are becoming slimmer.