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By Hideyuki Sano and Tom Westbrook
TOKYO/SINGAPORE, Sept 6 (Reuters) – With the race for the ruling party leader open, Japan’s stock market has obviously emerged victorious from the abrupt departure of Prime Minister Yoshihide Suga, with the Topix index hitting 31-year highs. .
Suga said Friday he will seek re-election in the Liberal Democratic Party’s (LDP) leadership race this month and will step down, paving the way for a new prime minister. unpopular reaction to COVID-19 and diminished public support.
Since Suga’s surprise announcement, the Nikkei has gained nearly 4% to its highest point since mid-April, while the Topix is up nearly 3% to a point that hasn’t been noticed since 1990, there is no transparent leader. that the winner will become prime minister.
“Basically, his party, the LDP, is market-friendly, but Suga is very popular because of the handling of the pandemic,” said Dave Wang, portfolio manager at Nuvest Capital in Singapore.
“With his resignation, the LDP’s chances of victory (smaller-space elections later this year) are expanding and the markets are happier. “
While Suga’s departure removes a major fear for Japanese markets, market participants say they expect Japanese inventors to catch up with other inventory markets, given the steady rise in Japanese corporate profits.
Global inventory costs have risen 15% so far this year, reaching all-time highs, hoping for a strong global economic recovery from the COVID-19 pandemic, with gains of 8% in the Nikkei.
Many investors see Vaccine Minister Taro Kono and former Foreign Minister Fumio Kishida as the two candidates.
Former Home Affairs Minister Sanae Takaichi could also be encouraged after local media reported that former Prime Minister Shinzo Abe would do so.
“Kono is noted as a reformer and can be positive for stocks, while there are uncertainties about Kishida given his penchant for fiscal adjustment. But the outlook can simply replace depending on the policies they adopt,” said Ryota Sakagami, jpMorgan’s lead equity strategist in securities.
Kishida called for relief from income-source disparities, promised for other economically vulnerable people and said an economic stimulus package worth “tens of billions of yen” was needed to combat the coronavirus.
Kono is believed to be more inclined towards business-friendly policies such as deregulation, while Takaichi, a member of the party’s more conservative wing, said he wanted to try to achieve 2% inflation.
“For now, dealing with the coronavirus and economic normalization would be the most sensible precedent for anyone and therefore their political differences would probably not be obvious,” Sakagami said.
Sakagami expected the Topix to succeed at 2,100-2,200 through the end of the year, an increase from 2. 9% to 7. 8% of existing levels.
The stockpile also comes as Japan has made progress in launching vaccines, and 58% of the population is now receiving a dose of COVID-19.
“I think inventory costs will continue to rise. Our vaccination is expected to soon be successful in the group grades,” said Masaru Ishibashi, deputy chief trade officer at Sumitomo Mitsui Bank.
(Reporting through Hideyuki Sano in Tokyo and Tom Westbrook in Singapore; Editing through Ana Nicolaci da Costa)