Japanese Stocks Poised to React to LDP Presidential Outcome Despite Calls for unity
TOKYO, Sept 29 – The outcome of the Liberal Democratic Party (LDP) presidential election is injecting uncertainty into Japanese stock markets, even as leading figures emphasize the need for party unity. Analysts predict varying degrees of market response depending on whether Taro Kono or Sanae Takaichi wins the leadership contest,with potential impacts ranging from modest adjustments to a important rally.
The election’s importance extends beyond domestic politics, influencing investor sentiment and potentially shaping Japan’s economic trajectory. A shift in leadership could signal changes in monetary policy, fiscal spending, and structural reforms – all factors keenly watched by both domestic and international investors. The stakes are high, with trillions of yen on the line as markets anticipate the next phase of Japan’s economic recovery. The new LDP president will likely become the next Prime Minister, setting the course for Japan’s economic policy for the foreseeable future.
Resona Holdings strategist Takei Daiki suggests that if Sanae Takaichi prevails, the stock market could see a boost, potentially reaching 46,000 yen. He notes that current stock prices have already undergone some adjustment from their highs, creating room for further gains.
Conversely, expectations are for a more muted market reaction should Taro Kono win.Daiwa Securities’ Tsuboi believes that while stocks frequently enough decline following a Kono victory, “adjustments are being made ahead of the line, so the downward push problably won’t be much stronger,” given that adjustment risks were already factored into high stock prices.
Takei further contends that the optimistic outlook for a potential U.S. rate cut is limiting downside risk. He estimates a potential lower price of around 43,500 yen,calculated at 15.5 times the upper limit of the central range for the price-earnings ratio (PER) over the past few years.
