Japanese Stocks Surge to Record Peaks In the Wake of Selection of Pro-Business Leader
Japanese equities have reached a record high following the nation's governing Liberal Democratic Party appointed Sanae Takaichi as its new leader, positioning her to be Japan's upcoming prime minister.
The key Nikkei index was up by approximately four and a half percent on Monday in Tokyo, after rising past 47,000 for the first time ever.
She, who has served in high-ranking positions including minister for economic security and internal affairs minister, is known for her support of higher government spending and reduced interest rates.
She is also a long-time admirer of ex- UK prime minister the Iron Lady and her market-oriented approach to economics.
Market Reaction and Economic Effects
Market participants applauded the news of her victory in the party leadership contest, with shares climbing in real estate, tech and heavy industry companies.
Although Japanese stocks rose, the yen hit a historic low against the euro and dropped by 1.7% against the American currency.
Monday's market response was largely a "knee-jerk reaction" to the potential appointment of the leader as prime minister, Japan economist Jesper Koll commented.
While her policy proposals to stimulate the economy through higher public outlays could benefit companies, they may additional pressure on the currency as the country's national debt increases, said Mr Koll.
Political Change and Challenges
Should confirmed later this month as the replacement to Shigeru Ishiba, Takaichi will be the nation's first woman prime minister.
Guided by late Prime Minister Abe, she has championed his policy framework - called the Abe economic policy - of high public spending and cheap lending.
If confirmed in the position, she will have to navigate a difficult US-Japan relationship and implement a trade agreement with US President Trump's administration, which was previously agreed by the Ishiba government.
She would additionally have to address a slow economic growth and families grappling with higher costs and slow wage growth.
With Trump expected to travel to the country later this month, the economist stated Takaichi will be keen to discuss a fresh deal with the US president "to lower the dollar weaker and to get the yen up."