Written By Bradley Shahenza
Japanese stocks surged to record highs on Monday after the ruling Liberal Democratic Party (LDP) elected Sanae Takaichi as its new leader, setting her on course to become Japan’s next prime minister.
The benchmark Nikkei 225 index climbed by around 4.5%, surpassing 47,000 points for the first time in history, as investors responded positively to her victory.
Takaichi, who has previously served as Minister for Economic Security and Minister for Internal Affairs, is widely known for her pro-business stance and advocacy for government spending to stimulate growth.
She has also expressed admiration for former UK Prime Minister Margaret Thatcher and her free-market economic policies, further strengthening investor confidence in her leadership approach.
Following the announcement, stocks in real estate, technology, and heavy industry recorded significant gains, reflecting optimism that Takaichi’s leadership will favor corporate expansion and infrastructure development.
Analysts say her policies could encourage further economic activity by maintaining low borrowing costs and increasing public investment.
However, the market rally was accompanied by volatility in currency trading. The yen hit a record low against the euro and weakened by 1.7% against the US dollar, raising concerns over the potential inflationary impact of Takaichi’s economic plans.
Japan economist Jesper Koll told the BBC that Monday’s surge was largely a “knee-jerk reaction” to her expected appointment, noting that while her spending proposals could boost business confidence, they may also expand Japan’s already high public debt and further pressure the yen.
If confirmed later this month as the successor to Shigeru Ishiba, Takaichi will make history as Japan’s first female prime minister; a milestone moment that markets believe could usher in a new era of reform and economic dynamism
