JAPAN’S Nikkei share average rallied more than 2 per cent on Friday (Sep 27), buoyed by further softening of the yen as markets closed just before results of the ruling Liberal Democratic Party’s leadership election were out.
The Nikkei ended 2.32 per cent higher at 39,829.56, its highest close since Jul 19, before the final results showed former defence minister Shigeru Ishiba overtaking right-wing economic security minister Sanae Takaichi in a runoff vote.
The broader Topix finished up 0.73 per cent at 2,740.94.
The market was reacting to Takaichi, an advocate of deceased former premier Shinzo Abe’s “Abenomics” stimulus policies and a vocal opponent of further interest rate hikes in Japan, coming in with the most votes in the first round, analysts said.
Her policies would have implied a weaker yen and lower yields, making it easy for share prices to rise.
Shigeru Ishiba’s win, however, will likely drag the market down in the short term, analysts said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Ishiba, a critic of past monetary stimulus, told Reuters that Japan’s central bank is “on the right policy track” with rate hikes thus far.
While he is a seasoned politician with deep thoughts on economic policy, Ishiba currently lacks a clear growth strategy, said Naka Matsuzawa, chief macro strategist at Nomura.
That might “work against the stock market” until his new Cabinet takes shape, although bank shares will likely get a boost from his victory, he said.
The yen bounced, recovering from earlier losses, on news of the Ishiba victory.
On Friday, Japanese chip-related stocks led the rally, supported by overnight gains in their US peers, with Tokyo Electron climbing 6.66 per cent to deliver the biggest boost to Nikkei.
Lasertec surged 8.19 per cent and was the biggest percentage gainer, while Advantest climbed 4.48 per cent.
Other major shares also made sizable gains, with Nikkei heavyweight Fast Retailing adding 2.53 per cent, SoftBank Group rising 2.26 per cent and Daikin Industries ending 6.28 per cent higher. REUTERS
