TOKYO – Sunday's snap parliamentary election offers an important thing for voters and investors abroad: growth and market stability.
Shinzo Abe's ruling party won control of the House of Representatives for another four-year term. Although Japan is under threat from North Korea, another Abe administration is good news since, under his leadership, the economy is humming and the stock market is at a 20-year high.
But hidden behind the economic curtain are a slew of corporate scandals. When Kobe Steel, Japan's third-biggest steelmaker, announced Tuesday that it had faked quality-control data on its products, shock waves propagated through global supply chains. Steel, aluminum and copper products used in everything from Japan's iconic Shinkansen bullet trains made by Hitachi to Toyota cars, Boeing aircraft and even nuclear power plants may have been affected, while the number of companies hit more than doubled to about 500.
The falsification was apparently carried out with the knowledge of quality-control managers and continued for decades, according to a Nikkei report that cites anonymous sources. Kobe Steel admitted that the fudging had been happening for at least 10 years. While the impact remains unclear, some regulators are sounding the alarm: The European Aviation Safety Agency recommended companies suspend buying Kobe Steel products as Japanese authorities investigate. The U.S. Justice Department is now asking the steelmaker's American unit to provide documents related to its products sold to U.S. companies.
On Friday, Kobe Steel said one of its copper plants was under investigation for violating Japanese industry standards. Kobe Steel stock closed down 1.59 percent in Tokyo to close at 868 yen. The shares have slid 36 percent since the scandal broke.