Japanese Equities Soar to Record Highs After Naming of Business-Friendly Leader
Japan's shares have hit a record high following the country's governing LDP selected Sanae Takaichi as its new leader, positioning her to be the country's next prime minister.
The key Nikkei 225 index rose by approximately 4.5% on Monday in Tokyo, after rising past forty-seven thousand for the first time ever.
She, who has held high-ranking positions including minister for economic security and internal affairs minister, is known for her advocacy of increased government spending and lower interest rates.
She is additionally a longstanding admirer of ex- UK prime minister the Iron Lady and her market-oriented philosophy to the economy.
Investor Response and Financial Impact
Investors welcomed the news of her victory in the LDP leadership race, with stocks rising in property, technology and heavy industry companies.
While Japanese stocks rose, the Japanese currency reached a historic low against the European currency and fell by 1.7% against the US dollar.
The day's reaction was mostly a "knee-jerk reaction" to the potential appointment of Takaichi as prime minister, an economist an expert commented.
While her economic plans to stimulate the economy through higher government spending could benefit companies, they may further weaken the currency as the country's national debt increases, noted Mr Koll.
Political Change and Issues
Should approved later this month as the replacement to the outgoing leader, Takaichi will be the nation's first woman prime minister.
Guided by former Prime Minister Shinzo Abe, she has supported his policy framework - known as the Abe economic policy - of increased government expenditure and cheap borrowing.
Should confirmed in the role, Takaichi will have to navigate a difficult bilateral ties and see through a tariff deal with American leader Donald Trump administration, which was previously agreed by the previous administration.
She would also have to address a sluggish economy and households facing rising expenses and stagnant income increases.
With the US president expected to visit Japan later this month, Mr Koll stated Takaichi will be keen to negotiate a new agreement with the US president "to get the US currency down and to strengthen the Japanese currency up."