Japanese stocks ended over 2% lower on Wednesday, following overnight losses on Wall Street because of heightened inflation woes, while investors awaited the election that would decide Japan’s next prime minister. The Nikkei average fell 2.12% to close at 29,544.29, its lowest since Sept. 3.
Just a few minutes after Tokyo’s market closed, Fumio Kishida was chosen as the new leader for the ruling Liberal Democratic Party, after a runnoff with Taro Kono as neither obtained a majority in an initial four-way vote, which started earlier in the day.
“Investors want to confirm who is going to be the next prime minister before they start making bets,” said Takatoshi Itoshima, a strategist at Pictet Asset Management.
Technology shares led the decline: Tokyo Electron falling 5.27%, Daikin Industries losing 4.15% and Advantest also losing 5.64%.
According to Toru Suehiro, Senior Economist, Daiwa Securities:
“The general direction will be that, instead of Abenomics’s trickle-down theory that assumed a huge monetary easing will boost big companies’ profits and then spread to other parts of the economy, (Fumio Kishida) explicitly refers to redistribution. So his policy is not just about a laissez-faire economic growth, and it might be unfavourable for market participants.”