TOKYO - "Please remain calm and stay in your seats. There are no safety problems with the plane or this flight and the turbulence will soon end."
That was the message Japanese Economics Minister Akira Amari gave to investors this week after Tokyo share prices plunged and long-term interest rates spiked. And for now, investors look likely to give the government's "Abenomics" recipe for reflating the economy the benefit of the doubt.
That said, a dose of caution is creeping in after heady gains in share prices and a sharp fall in the yen since Prime Minister Shinzo Abe took office following his Liberal Democratic Party's (LDP) big election win in December.
"I don't see the recent market moves as a sign that hopes for Abenomics are tapering off. Rather, it's a correction of what was a very rapid factoring in of expectations that things will change suddenly," said Tohru Sasaki, chief foreign exchange strategist at JP Morgan Chase Bank in Tokyo.
"Even if Abenomics does succeed in changing things around, it will certainly take time. People realised that and are correcting their positions," Sasaki said.
Tokyo's Nikkei share average has tumbled nearly 14 per cent since hitting a 5-1/2-year high on May 23. It slid 7.3 per cent that same day for its biggest one-day fall since the March 2011 earthquake and tsunami.
Still, the benchmark is up 11 per cent since April 4, when the Bank of Japan unveiled sweeping stimulus, and has risen 33 per cent so far this year.
Abe's government is set to announce a new strategy for sustainable growth and macro-economic guidelines including fiscal reform on June 14, although hopes of bold steps in areas such as deregulation are already dimming.
"Expectations for 'Abenomics' have not yet completely worn off, but investors are becoming cautious, which is one factor behind recent stock falls," said Hiromichi Shirakawa, chief economist at Credit Suisse in Tokyo.
"To keep up expectations, the government must take bold and concrete measures such as corporate tax cuts, labour mobility and immigrants, but none of these are likely to be addressed in its growth strategy."