Recently, a lady, not a business, was crowned the new favorite in Japan’s markets. Sanae Takaichi, a conservative, became the first female prime minister of Japanese on Monday when she assumed leadership of the ruling Liberal Democratic Party, sending stocks to all-time highs.
As investors anticipate Takaichi to double down on the “Abenomics” strategy, the Nikkei 225 jumped by almost 5% and crossed 47,000 for the first time in its history. Developed by former Prime Minister Shinzo Abe, the pro-business agenda advocates for low interest rates and substantial economic stimulation.
Takaichi is expected to encourage large spending and prevent the Bank of Japan from raising interest rates too soon, according to traders’ bets. On Monday, stocks were boosted by the possibility of cheap money and government funds, but the yen’s value also declined. The currency, a well-known result of Japan’s consistently loose monetary policy, sank to a record low against the euro and dropped almost 2% against the dollar.
Hopes that a weaker yen would increase foreign revenues drove a rally among exporters, real estate companies, and defense contractors. A weaker yen is a mixed blessing for Japan. Carmakers, manufacturers of machinery and technology, and the tourism industry all benefit from lower export prices overseas.
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