TOKYO: Japanese stocks and bond yields soared while the yen fell on Monday after conservative Sanae Takaichi won the leadership of the ruling party.
Takaichi, likely to become prime minister this month, has previously supported aggressive monetary easing and expanded government spending, echoing her mentor former premier Shinzo Abe.
During the Liberal Democratic Party campaign concluding Saturday, she toned down calls for fiscal expansion and opposition to Bank of Japan rate hikes amid rising prices.
After winning the top job, Takaichi pledged to first implement measures addressing inflation and boosting the economy, rural areas and primary industries like farming and fisheries.
Takaichi “looks more inclined than the others to juice the economy,“ said Taro Kimura at Bloomberg Economics.
“Still, with inflation rising and long-term (bond) yields climbing, she will have to balance her stance with reality, in order not to accelerate cost-of-living squeeze and jolt the rate market,“ Kimura said.
The Nikkei 225 rose just over four percent in morning trade while the yen fell to 149.76 against the dollar and hit a new record against the euro.
Yields on 30-year Japanese bonds rose sharply, reflecting fears the country’s already colossal debts will balloon further under Takaichi.
Takaichi, 64, set to become Japan’s first female prime minister, is seen as an arch-conservative and China hawk.
One of her first official duties will be receiving US President Donald Trump, reportedly making a stopover in Japan in late October.
Takaichi said Saturday she had no plans to overturn Tokyo’s recent trade deal with Washington, over which questions remain.
The heavy metal drummer in her youth saw off four other candidates to become head of the Liberal Democratic Party.
In a runoff vote she beat the more socially progressive Shinjiro Koizumi, 44, who would have become Japan’s youngest premier of the modern era.
Takaichi’s primary task will be restoring the fortunes of the LDP, which has governed almost non-stop since 1955.
Outgoing premier Shigeru Ishiba took the reins last year but his LDP-led coalition lost its majority in both parliamentary houses, partly due to voter anger at inflation and an LDP slush fund scandal.
One party on the rise is Sanseito, which echoes other populist movements calling immigration a “silent invasion” despite foreign-born residents comprising only around three percent of the population.
Japan should “reconsider policies that allow in people with completely different cultures and backgrounds,“ Takaichi said during the LDP campaign. – AFP