Near-term policy catalysts few and far between

The details of the fiscal stimulus package unveiled on Thursday were disappointing. The corporate tax surcharge will be phased out a year earlier than scheduled, but there was no mention of a cut in the standard rate. Instead, the measures focused on old-fashioned subsidies and public works which will do very little to boost competitiveness. Major structural reforms may have to wait until next summer and, with the Bank of Japan in no hurry to ease again either, further gains in Japanese equities may increasingly have to rely on positive developments overseas.