Australia-Japan Research Centre

Author: Willem Thorbecke, Senior fellow, RIETI

This column investigates how Japanese sectoral stock returns have performed during the Coronavirus Pandemic. It also investigates whether these responses were driven by macroeconomic or by sector-specific factors. The Japanese machinery sector was harmed by the macroeconomic environment, as the slowdown froze demand for capital goods. The real estate and travel & leisure sectors were harmed by specific influences such as the effects of the voluntary lockdown and travel restrictions on these industries. Electronic office equipment and automobiles have been hit by both the macroeconomic environment (e.g., the slowing world economy) and by idiosyncratic factors (e.g., the closing of auto dealerships). On the other hand, sectors related to peoples’ health and their ability to obtain entertainment and goods and services at home have done well. Their gains have been driven entirely by sectoral advantages and not by macroeconomic changes. These findings may provide information for policymakers as they seek to promote recovery from this devastating crisis.

Read the article on the RIETI website or as a video presentation by the author.