As Prime Minister Shinzo Abe looks for new growth engines to reinvigorate Japan, he's ignoring the most obvious one. On Friday, Japan's stock markets zoomed upward on news that the Bank of Japan is ramping up its massive quantitative-easing program, boosting holdings of government bonds to an annual pace of about $725 billion and purchasing riskier assets.
Soon afterward came leaks that Japan's $1.2 trillion Government Pension Investment Fund would dramatically rebalance its portfolio, reducing holdings of Japanese bonds and raising the share of Japanese and foreign stocks to 25 percent apiece. The one-two punch cheered punters, many of whom had begun to be disillusioned with the pace and results of "Abenomics."
Whether Friday's moves will be enough to boost inflation, now at its slowest pace in half a year, and revive Japan Inc. is another question.