Japan has just experienced a historic day: Sanae Takaichi has become the first woman to lead the country. Her election sparked a wave of euphoria in the markets. The Nikkei 225 flirted with the symbolic 50,000-point mark, an all-time high, buoyed by expectations of an ambitious economic recovery and a more aggressive policy.
A political victory with a turning point
With 237 votes out of 465 in the Lower House, Takaichi emerged as the head of the government after a swift agreement between her Liberal Democratic Party (LDP) and the Japan Innovation Party (JIP), a rising reformist group. This reconciliation ends 26 years of alliance with Komeito, often accused of hindering major reforms. The goal is clear: revitalize growth, modernize the economy, and strengthen Japan’s position amidst regional tensions. Takaichi embodies a strong right-wing stance, a fan of Margaret Thatcher, determined to ‘unleash the country’s potential’ according to her close associates.
A symbolic and strategic cabinet
Upon her appointment, Takaichi made a strong statement by appointing Satsuki Katayama, a respected figure in the economic world, as Japan’s first female Finance Minister. Three of her former internal rivals, Yoshimasa Hayashi, Toshimitsu Motegi, and Shinjiro Koizumi, also join her government. A signal of unity aimed at consolidating a fractured party, but also reassuring the markets about the country’s political stability. The initial reforms announced are expected to combine targeted tax cuts, increased defense budget, and a civilian nuclear revival, an explosive mix for investors.
The ‘Takaichi trade’ ignites the markets
Foreign investors are flocking in, betting on what they already call the ‘Takaichi trade.’ In trading, the Nikkei surged by 1.5% before closing up by 0.3% at over 49,900 points. Since January, the index has shown a spectacular gain of over 25%. Analysts see a new phase of structural growth, supported by the prospect of a stable and pro-growth government. Tomochika Kitaoka, a strategist at Nomura Securities, believes that:
Japan is becoming a serious bet once again for global investors.
An economy fueled by optimism… and a weakened yen
While the stock market breaks records, the yen continues its decline below the ¥151 threshold against the dollar. Markets now anticipate that the Bank of Japan will hold off on any rate hikes, preferring to support the recovery. This mix of expansionary policies, low rates, nuclear reopening, and strengthened defense is reshaping the Japanese economic landscape.
Sanae Takaichi not only shattered a glass ceiling. She has awakened one of the largest global markets. If her fragile alliance with JIP holds steady, Japan could well return to sustainable growth, asserting itself once again as an economic powerhouse to closely watch.
