Japanese Shares Climb to Record Peaks In the Wake of Naming of Business-Friendly Leader
Japan's shares have reached a all-time peak after the country's ruling LDP named Sanae Takaichi as its new leader, paving the way for her to be Japan's next leader.
The key Nikkei index gained around four and a half percent on Monday afternoon in Tokyo, after climbing past forty-seven thousand for the first time.
Takaichi, who has held senior government roles including minister for economic security and internal affairs minister, is known for her support of increased government spending and lower interest rates.
She is also a long-time supporter of former British prime minister Margaret Thatcher and her market-oriented approach to the economy.
Investor Reaction and Economic Impact
Market participants welcomed the announcement of her win in the party leadership contest, with stocks climbing in property, tech and industrial firms.
Although Japan's equities rose, the yen reached a historic low against the euro and dropped by 1.7% against the US dollar.
Monday's market response was mostly a "immediate response" to the possible appointment of the leader as the nation's leader, Japan economist an expert told.
Although her economic plans to boost the economy through increased public outlays could benefit companies, they may additional pressure on the currency as Japan's debt increases, noted the economist.
Political Change and Issues
If approved in the coming weeks as the successor to the outgoing leader, Takaichi will be the nation's first woman prime minister.
Mentored by former Prime Minister Shinzo Abe, she has supported his economic vision - known as the Abe economic policy - of high government expenditure and low-cost borrowing.
Should appointed in the position, Takaichi will have to navigate a difficult US-Japan ties and implement a trade agreement with US President Trump's government, which was earlier negotiated by the previous administration.
She would additionally have to contend with a sluggish economic growth and families facing higher costs and stagnant wage growth.
With Trump scheduled to visit Japan later this month, the economist said she will be eager to negotiate a fresh deal with the US president "to get the dollar down and to strengthen the Japanese currency stronger."
