Japan's Nikkei stock average could rally nearly 30 percent in 2013 due to an aggressive push to reflate the economy under the country's new premier, the chief executive of Daiwa Securities Group told Reuters in an interview.
While securities executives are known for their bullish market predictions, the comments from Takashi Hibino reflect an optimism among business leaders that the policies of Shinzo Abe will give Japan's sluggish economy a needed jolt.
Abe, who is set to become prime minister on Wednesday after his opposition Liberal Democratic Party won this month's lower house election, is a proponent of fiscal expansion and aggressive monetary policy to defeat deflation, which has sapped the world's third-largest economy for nearly two decades.
"If the correct policies are enacted the market will rise," Hibino said in an interview on Friday. His comments were embargoed for release on Dec. 26.
"There has not been an administration as committed to escaping deflation. And that's why this time I choose to be optimistic."
Hibino predicted that the Nikkei, which has surged 15 percent since mid-November when elections were called, would likely trade between 9,500 and 13,000 next year. The upper limit would mark a 29 percent gain on Tuesday's close of 10,080.12.
On the back of the upturn in stocks, Hibino said he was confident Japan's second-largest brokerage would generate a net profit in the current financial year through March 2013, after losing a combined 76.7 billion yen ($904.5 million) in the previous two years.
Daiwa cut more than 500 jobs overseas starting in 2011 to stem the losses. Its biggest weakness has been investment banking, where it has struggled since ending a joint venture with Sumitomo Mitsui Financial Group in 2009.