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Tokyo stocks are likely to see a sustained rise as Joe Biden’s win in the U.S. presidential election has raised expectations he will implement a large fiscal stimulus package to boost the coronavirus-hit economy.

Following a post-election buying spree on the Tokyo market, many investors are expected to take a wait-and-see stance as they size up Biden’s proposed economic policies such as tax hikes on the wealthy and financing investments ranging from infrastructure to clean energy and regulations on Facebook Inc. and other U.S. technology giants.

However, the degree of global economic recovery from the prolonged coronavirus pandemic continues to serve as a source of uncertainty for the market, according to analysts.

Many analysts forecast the 225-issue Nikkei average will move between 23,000 and 24,000 toward the end of the year, with some predicting the benchmark index to rise to 25,000 to round out 2020, with the uptrend continuing in the medium- to long-term.

After hitting a 16-month high of ¥24,083.51 on Jan. 20, the Nikkei plunged to 16,552.83 on March 19 amid uncertainty over the pandemic. It bounced back to 23,465.53 on Sept. 3, recovering to pre-pandemic levels, and is recently trading around the 23,000 level.

Tokyo stocks traded sharply higher Monday, with the Nikkei ending at a fresh 29-year high, as investors were relieved that Biden’s victory removed some U.S. political uncertainty.

The Nikkei ended up 514.61 points, or 2.12%, from Friday at 24,839.84, its highest closing since Nov. 5, 1991.

“The market has been jittery about who will be the new president of the United States. But the election result, as reported by U.S. media, calmed investors’ nerves and will boost stock markets,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co.

In the foreign exchange market, many dealers see the dollar trading between ¥101 and ¥109 for the rest of the year, after hovering around ¥104 to 105 in recent weeks.

“The dollar is poised to rise toward the end of the year on hopes for the new president’s policies,” said Takuya Kanda, senior researcher at the Gaitame.com Research Institute.

Biden has pledged $2 trillion to upgrade America’s infrastructure and shift to a clean-energy economy. Democrats are also calling for $2 trillion for an additional stimulus package to fight the economic fallout from the virus.

Biden’s victory — if accompanied by results that sweep Democrats into a majority in both the Senate and House of Representatives — would result in a larger stimulus package than what Republican President Donald Trump’s presidency would deliver and boost stock markets, according to brokers.

But it is far from sure that the Democrats will retake the Senate, raising the possibility that Congress will remain divided. Brokers say the development has eased concerns about the outlook for corporate earnings as a divided Congress will prevent Biden from pushing through some of his policy agenda such as raising taxes on big businesses and lowering drug prices.

“As governments are likely to continue stimulus measures and massive monetary easing in a bid to revive the world economy, we are expected to see a rise in stock prices in the medium- to long-term,” said Maki Sawada, vice president of the investment research and investor services department at Nomura Securities Co.

Biden, the vice president under Trump’s predecessor Barack Obama, is seeking a tax hike on wealthy individuals and wants to raise the corporate tax rate from 21% to 28%. However, the level is still lower than the 35% rate that was in place when Trump took office nearly four years ago.

Nomura Securities estimates that if Biden’s corporate tax proposal is enacted in 2021 and takes effect in 2022, it would reduce the per-share earnings of companies comprising the U.S. benchmark S&P 500 index by 4.3%.

The S&P 500 companies could still keep posting record profits even if the new administration raises the corporate tax rate in 2022, according to the Japanese brokerage.

Still, some brokers remain doubtful about the global economic outlook and have relatively pessimistic short-term views on equity markets amid the pandemic.

“I think we should be cautious about the view that shares would rise after the U.S. presidential election, just like the same market reaction we saw in the last such election in 2016,” said Koichi Fujishiro, senior economist at the Dai-ichi Life Research Institute.

“Shares lack the strength to climb further due to the impact of the coronavirus,” he said.

Fujishiro said the current situation is different from the advance equities saw after the 2016 election, an event that happened when the global economy was recovering in the wake of China’s devaluation of the yuan and the United Kingdom’s decision to leave the European Union.

With no end to the coronavirus pandemic in sight, France, Germany and the U.K. have announced new lockdowns to curb virus transmissions, while the United States has repeatedly set fresh records for daily infections.

Besides his proposed tax hikes, investors are concerned Biden’s other policies, such as regulating big U.S. technology companies, including Alphabet Inc., the parent of Google LLC, and Facebook, could prove to be a drag on key U.S. indexes and subsequently Tokyo shares.

If Biden’s policies do not help the United States get its coronavirus outbreak under control, “the Nikkei is expected to sink to the 20,000 level, and the dollar could touch ¥100 in the January-March quarter,” said Miura, citing the risk of a double-dip recession.

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