Japan’s stock market just hit an all-time high, but the real story behind this surge might surprise you. Just 44 minutes ago, the ruling Liberal Democratic Party (LDP) named Sanae Takaichi as its new leader, setting the stage for her to become Japan’s first female prime minister. This move sent shockwaves through the financial world, with the Nikkei 225 index soaring by 4.5% on Monday afternoon in Tokyo, breaking the 47,000 mark for the very first time. But here’s where it gets controversial: Takaichi’s pro-business stance, which includes advocating for higher government spending and lower borrowing costs, has investors cheering—but economists are divided. Could her policies, inspired by Margaret Thatcher’s free-market principles, reignite Japan’s economy, or will they pile on more debt and weaken the yen further? And this is the part most people miss: While stocks climbed, the yen plummeted to a record low against the euro and dropped 1.7% against the US dollar. Japan economist Jesper Koll calls Monday’s market reaction a ‘knee-jerk’ response to Takaichi’s potential leadership, but the long-term implications are far from clear. Takaichi, a protégé of the late Prime Minister Shinzo Abe, is a staunch supporter of ‘Abenomics,’ which prioritizes high public spending and cheap borrowing. If confirmed, she’ll face a daunting to-do list: navigating a tricky US-Japan relationship, finalizing a tariff deal with the Trump administration, and tackling Japan’s sluggish economy and rising household costs. Speaking of Trump, with his expected visit to Japan later this month, Takaichi will likely push for a new agreement to strengthen the yen against the dollar. But will her bold vision pay off, or is Japan headed for uncharted economic waters? What do you think? Is Takaichi’s approach the game-changer Japan needs, or a risky gamble? Let us know in the comments!
