With the dust settled after the Japanese Prime Minister's election, Fumio Kishida will become the next Prime Minister.

As a result of this, the Japanese yen exchange rate has fluctuated dramatically, with the US dollar against the yen previously surging 1%, breaking through the 146 level at one point.

After the election results were announced, the Japanese yen quickly appreciated, $USD/JPY (USDJPY.FX)$ falling by 1.06% to 143.302.

Japanese stocks have been rising for two consecutive days.$Nikkei 225 (.N225.JP)$The index surged by 2.32% today, with the latest report at 39829.56 points; the TOPIX index rose by 0.73%, reaching 2740.94 points.

$Isetan Mitsukoshi Holdings (3099.JP)$KKR & Co stocks rose more than 8%.$Kawasaki Heavy Industries (7012.JP)$Up more than 7%,$Mitsubishi Heavy Industries (7011.JP)$,$Mitsubishi Estate (8802.JP)$Increased by more than 5%.

Shigeru Ishiba wins.

On Friday, the first round of Japan's general election ended, with two candidates, Sanae Takaichi and Shigeru Ishiba, emerging as the frontrunners and advancing to the second round of elections.

In the second round of elections, Shigeru Ishiba defeated Sanae Takaichi to win, becoming the president of the Liberal Democratic Party of Japan.

This means that Shigeru Ishiba will become the next Prime Minister of Japan at the extraordinary session of the Diet on October 1st.

The new Prime Minister will need to lead the country through a transition period, as Japan is emerging from three decades of stagnation and facing increasing diplomatic and security challenges.

At the same time, the new Prime Minister will also be confronted with persistent deep structural issues, particularly aging and shrinking population, continued low levels of productivity, and economic inequality.

According to the data, 67-year-old Shiro is a senior figure within the party, having held multiple high-level positions such as Defense Minister.

Since 2008, Shiro has run for the Liberal Democratic Party leadership 4 times without success, making this his 5th attempt.

Shiro is considered a hawkish figure within the party, advocating for the establishment of an “Asian NATO” by integrating alliance relationships with the United States, Japan, South Korea, and others.

He supports the efforts of the Bank of Japan in tightening monetary policies and emphasizes the need for government spending to further develop regional economies to address the decline in rural population.

How will assets perform?

With Shiro's official election, CICC research reports have pointed out that he has expressed opposition to “Abenomics” on several occasions directly or indirectly, favoring policies in the economic and financial fields with a preference for “hoping for marginal tightening of monetary policy, marginal appreciation of the yen, and fiscal tightening.”

CICC predicts that if Shiro is elected, the price fluctuations of various Japanese assets may see a reversal of “Abenomics trade,” potentially leading to a strengthening yen, falling Japanese stocks, and rising Japanese bond yields.

However, in terms of the magnitude of the change, considering that Japan in 2024 has already undergone a significant transformation from 2012, there is a high probability that it may weaken.

Editor/new