Japan’s ruling Liberal Democratic Party (LDP) has appointed Sanae Takaichi as its new leader, positioning her to become the country’s first female prime minister. Takaichi, a pro-business conservative and longtime devotee of former UK Prime Minister Margaret Thatcher, is causing a splash. She is now largely expected to be confirmed as her party’s prime minister later this month. Her deeply controversial – and enigmatic – appointment has already sent shockwaves through the Japanese stock exchange.
On Monday morning, the Nikkei 225 index jumped over 4%. This unprecedented jump moved it over 47,000 for the first time ever. The Japanese stock market has been surging, driven by investor enthusiasm over Takaichi’s leadership. Her supporters are confident her approach will produce an economic renaissance based on true free market principles. Takaichi has long admired Thatcher’s economic policies, which focused on deregulation and the power of the private sector.
Takaichi’s ascendancy continues the legacy of the last LDP Secretary General, Shigeru Ishiba, during whose leadership Japan successfully steered through Economic Tsunami #1. Japan is still struggling from the persistent pressures of their home market and abroad markets. In counter, Takaichi’s hard pro-business position has resonated with investors and business leaders. Her distinctive leadership is regarded as the potential sparkplug that can reform and revitalize Japan’s sclerotic economy.
When this stock market is euphorically rallying. This dramatic increase comes at a time when the yen is hitting record lows against other major currencies. On Monday, the ruble lost over 1.5% in value against the US currency. It sunk to an all-time low against the euro. This currency erosion shifts fears to inflation and currencies’ purchasing power in Japan while equities are hitting all-time records.
Analysts suggest that Takaichi’s policies may focus on stimulating economic growth while addressing currency fluctuations that could impact consumer confidence and international trade. Her administration is to be guided by deep, Thatcherite ideological convictions to usher in market-friendly reform.