Japanese Equities Climb to All-Time Peaks After Selection of Business-Friendly Head
Japan's equities have hit a record peak following the country's governing LDP selected Sanae Takaichi as its new leader, positioning her to become the country's next prime minister.
The benchmark Nikkei index was up by approximately 4.5% on Monday afternoon in the capital, after climbing above forty-seven thousand for the first time ever.
Takaichi, who has held high-ranking positions including economic security minister and internal affairs, is known for her advocacy of higher public expenditure and reduced interest rates.
She is additionally a longstanding supporter of ex- UK leader Margaret Thatcher and her free market approach to economics.
Investor Response and Economic Effects
Investors welcomed the announcement of her victory in the party leadership contest, with stocks rising in real estate, technology and industrial firms.
Although Japan's equities gained, the Japanese currency hit a record low against the European currency and fell by one point seven percent against the US dollar.
Monday's reaction was largely a "immediate response" to the potential selection of the leader as the nation's leader, Japan economist Jesper Koll told.
While her policy proposals to boost the economic growth through increased government spending could benefit companies, they may additional pressure on the yen as the country's national debt increases, said the economist.
Leadership Transition and Challenges
Should approved later this month as the replacement to the outgoing leader, Takaichi will be the nation's first woman leader.
Guided by former Prime Minister Shinzo Abe, she has championed his policy framework - known as Abenomics - of high government expenditure and cheap borrowing.
Should confirmed in the position, she will have to navigate a difficult bilateral ties and implement a trade agreement with US President Trump's government, which was earlier negotiated by the Ishiba government.
She would also have to address a slow economy and families facing higher costs and slow income increases.
As the US president expected to visit Japan soon, the economist said she will be eager to negotiate a new agreement with the US president "to get the dollar down and to get the Japanese currency stronger."
