Investors, hear ye: Japan's third arrow of Abenomics gets approved

Brace yourself for some big news.

According to DBS, the new version of the long-term growth strategy – the third arrow of Abenomcis – was approved by the cabinet on June 24th. As flagged in advance by policymakers, the main initiatives include cutting corporate tax rate to below 30% from the current 35%, and revising the asset portfolio of the Government Pension Investment Fund (GPIF). 

Here's more from DBS:

These two topics have already been widely anticipated by investors, which illustrated why the financial markets have reacted mutely.

Investors might remain unsatisfied with the lack of details, such as the magnitude and the time table of corporate tax cuts, and the recommendation of a desirable investment portfolio for the GPIF.

In terms of the fundamental reforms with long-term impact on the real economy, the government only proposed some modest changes in the new growth strategy. On the immigration issue, the government said it will expand a foreign technical trainee program that allows foreigners to work in designated industries for a temporary period.

The admission quota was not specified. And the maximum stay period will only be extended slightly, from 3 years to 5 years.

Regarding the labor market rules, the government pledged to ease the compulsory overtime pay rule, in order to establish a new remuneration system under which salaries will be paid based on employees’ working performance rather