Japan’s Nikkei has risen 2.3% to a one-month high after Prime Minister Fumio Kishida’s Liberal Democratic Party won by a surprisingly strong election victory, raising hopes for stability and stimulus in the term ahead. The Prime Minister announced he would pursue defence policies aimed at deterring China, address climate change and accelerate recovery from the pandemic.
Reuters state that “Kishida’s conservative Liberal Democratic Party (LDP) defied predictions and held onto its single party majority in Sunday’s election, solidifying his position as head of the fractious party and giving him a freer hand in parliament, with recovery from the coronavirus pandemic – including an extra budget – taking priority.”
With initial fears that Kishida, who has only been in power for a month, could become another one of Japan’s short-term prime ministers, meant the shock result sent stocks surging in relief – allowing Kishida to put his own stamp on policies ahead of an upper house election next summer.
Reuter’s go on to comment, that “The LDP’s solid victory in the parliamentary election also eased market fears of massive bond issuance because it will likely take pressure off Kishida to inflate the size of a pandemic-relief stimulus package.”
The Nikkei index does not allow individual foreign fund selectors to buy and manage stocks directly. However, investors can obtain exposure to the index by buying stocks through ETFs whose components correlate specifically to the Index.
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