Japan's Shares Surge to Record Peaks Following Appointment of Business-Friendly Leader
Japanese shares have hit a all-time high after the country's ruling LDP appointed Sanae Takaichi as its new leader, positioning her to become Japan's upcoming leader.
The benchmark Nikkei 225 index gained around 4.5% on Monday in Tokyo, after climbing past 47,000 for the first time.
Takaichi, who has held high-ranking positions including minister for economic security and internal affairs minister, is known for her advocacy of higher government spending and reduced borrowing costs.
She is additionally a long-time admirer of ex- British leader Margaret Thatcher and her market-oriented approach to economics.
Market Response and Economic Effects
Investors applauded the news of her win in the party leadership contest, with shares climbing in property, technology and industrial companies.
While Japan's equities rose, the Japanese currency reached a record low against the European currency and fell by 1.7% against the American currency.
Monday's market response was largely a "immediate response" to the possible appointment of the leader as the nation's leader, an economist Jesper Koll told.
While her policy proposals to boost the economy through increased government spending could help companies, they may further weaken the yen as the country's national debt increases, noted the economist.
Political Change and Issues
If confirmed in the coming weeks as the replacement to Shigeru Ishiba, she will be Japan's first female prime minister.
Mentored by former Prime Minister Shinzo Abe, she has championed his policy framework - called the Abe economic policy - of increased public spending and low-cost lending.
If confirmed in the position, Takaichi will have to manage a difficult US-Japan relationship and implement a trade agreement with American leader Donald Trump administration, which was previously agreed by the previous administration.
She would also have to contend with a sluggish economic growth and families facing higher costs and stagnant income increases.
With the US president expected to travel to Japan soon, the economist said she will be keen to discuss a new agreement with the US president "to lower the dollar down and to get the Japanese currency up."
