Thursday, April 9, 2009

Japan shares up on stimulus plan

Shares in Tokyo have risen on details of an economic stimulus plan the government is expected to pass.

Japan's ruling Liberal Democratic Party, revealed details of bigger-than-expected spending of 15.4 trillion yen ($154bn; £105bn), or 3% of GDP.

The spending contains measures to encourage the use of solar panels and fuel-efficient cars.

Japan's benchmark Nikkei 225 index closed at a three-month high, rising 3.74% to finish at 8,916.06.

Shares in carmakers and solar power-related firms gained after details of the draft plan were released.

The market in Hong Kong also rose. The Hang Seng Index was up 2.3% at 14,808.78.

'Temporary measures'

The package is set to create a financial safety net for temporary workers, boost struggling firms and support regional economies.

It has also been reported that there will be measures to support nursing and medical services, and support elderly care.

"The contents look like temporary measures to front-load demand, but they do not pay attention to increasing productivity on the supply side," said Masamichi Adachi, an economist at JP Morgan.

"This may contribute to GDP for a year. The consequences over the longer term are negative as we are piling up more of a fiscal burden. Bond issuance will go up from here on."

The package came out as figures showed Japan's machinery orders unexpectedly rose in February thanks to gains in the services sector.




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