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There are some who fear Abenomics could turn out to be little more than a hope-fuelled rally and a somewhat weaker currency. Not Japan's banks, it seems, if Sumitomo Mitsui Trust Holding's (SMTH) ¥200-billion ($2.1-billion) buyback of a state-owned stake dating from the rescue of one of its predecessor banks a decade ago is a guide.

Banks have been among the biggest beneficiaries of Tokyo's rally since Shinzo Abe was assumed to be the next prime minister. Within the sector's three-fifths gain, SMTH is the best-performing of the giants, up 45 per cent. That rally has taken its shares above the state's ¥400-a-share break-even point for the first time since 2008, so a prosaic reason for the buyback is that the government wants its money back. Still, any self-funded payout that involves retiring half the shares implies regulatory confidence. Unsurprisingly, shares jumped in other banks with state stakes, including Resona and Aozora.

Deliberating shrinking equity however also implies a broader confidence. Banks that can charge average interest of just 1.5 per cent on long-term loans, according to Nomura, will be excited by the prospect of a reflated economy. An improving global outlook does not hurt either. But Japan's turnaround will be slow.

Deflation is still the norm. Details of Mr. Abe's growth strategy – the structural pillar of Abenomics after fiscal stimulus and looser monetary policy – are expected only in June. Businesses are still cautious, too: deal making, a key source of banking fees and loans, has had its slowest start to the year in at least a decade, according to Dealogic.

Investors may note with dismay that SMTH's freedom from state influence comes so long after funds were pumped in. Turnarounds as big as that following Japan's banking collapse, or Mr. Abe's attempt to kick-start its sputtering economy, take a long time to justify the early hopes.

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