Tokyo Stocks Backed by Policy Hopes Ahead of LDP Election

Tokyo, Sept. 29 (Jiji Press)–The Tokyo stock market is being supported by hopes for active economic policy measures under Japan’s new prime minister ahead of the ruling Liberal Democratic Party’s Oct. 4 presidential election. Recent media polls suggest that agriculture minister Shinjiro Koizumi and former economic security minister Sanae Takaichi are leading the party leadership race. “Takaichi gives the strong impression of advocating for active fiscal policy and monetary easing, which are associated with higher stock prices,” said an official at a major brokerage firm. “Market participants remember the so-called Takaichi trade, which boosted stock prices during last year’s LDP leadership race,” said Ryotaro Sawada, senior analyst at Tokai Tokyo Intelligence Laboratory Co. “Stock prices are more likely to climb if Takaichi is elected.” As Takaichi has listed artificial intelligence, semiconductors and nuclear fusion as critical to economic security, investors are pinning hopes on stocks linked to these sectors. On the other hand, Koizumi is viewed by some as emphasizing fiscal discipline, and therefore his win in the party election may trigger selling in the stock market. Still, Ryuta Otsuka, a strategist at Toyo Securities Co. said that Koizumi would have no choice but to accept opposition proposals for economic stimulus, such as tax cuts, as the LDP-led administration lacks majorities in both chambers of the Diet and needs cooperation from opposition parties. Any fall in stock prices in the event of Koizumi’s win “would likely be temporary,” Otsuka said. Meanwhile, an official at an investment advisory firm said, “There are no guarantees that campaign policies will be carried out.” As the benchmark Nikkei 225 stock average has been hitting all-time highs prior to the LDP election, the official called for caution, saying, “Expectations are running ahead.” END [Copyright The Jiji Press, Ltd.]