Sanae Takaichi listens to a query after visiting the Yasukuni shrine to honour the battle useless durig the shrine’s spring competition in Tokyo on April 23, 2015.
Toshifumi Kitamura | Afp | Getty Images
Having gained the presidency of Japan’s ruling Liberal Democratic Party, Sanae Takaichi is on the verge of changing into the nation’s first feminine prime minister.
Takaichi, a hardline conservative and shut ally of the late Shinzo Abe, stated Saturday that she would “work, work, work” to flip “people’s anxieties about their daily lives and the future into hope.”
Her rise comes at a time of financial pressure at house and tense relations overseas — and assessments whether or not Japan doubles down on the conservative, pro-Abenomics agenda that outlined the previous decade.
Takaichi’s victory follows Prime Minister Shigeru Ishiba’s resignation after the LDP misplaced its majority in each homes of parliament in 2024 and 2025, leaving it to govern as a minority.
This additionally signifies that when the Diet convenes on Oct 15, opposition events might theoretically block Takaichi’s affirmation as prime minister, though analysts say the danger of that is low.
Takaichi’s first activity is to safe the assist of not less than one opposition social gathering to kind a working majority, analysis agency BMI stated in a observe Monday.
However, opposition events face a dilemma: becoming a member of the LDP in a coalition might enhance their affect however danger alienating voters dissatisfied with the ruling social gathering.
Should Takaichi attain a take care of the opposition, BMI stated her government will face a number of challenges, together with a cost-of-living disaster, managing safety and commerce relationships with U.S. President Donald Trump, in addition to addressing home considerations concerning the rising variety of foreigners residing in or visiting Japan.
Abenomics 2.0?
Takaichi is seen as a proponent of “Abenomics,” the financial technique of Shinzo Abe, which espoused free financial coverage, fiscal spending and structural reforms.
She had beforehand criticized the Bank of Japan’s plan to increase rates of interest, which BOJ Governor Kazuo Ueda beforehand stated on Friday that the central financial institution would set charges “without any preconceptions.”
The BOJ ended its adverse rate of interest regime in March 2024 and most lately kept rates at 0.5%.
“We can already guess that she won’t bring inflation down, because if she’s going to double down on Abenomics of the past, which means a sharply weaker yen, which means more government spending, that arguably means more inflation,” stated William Pesek, the creator of Japanization: What the World Can Learn from Japan’s Lost Decades.
The LDP selected Takaichi as a result of they felt she was the very best particular person to take care of U.S. President Donald Trump, Pesek, a long-time Asia watcher, instructed CNBC’s “Squawk Box Asia.”
“She was probably the best option to face off with Trump at this very tense moment between Trump and the rest of the world,” Pesek stated.
Last week, Takaichi reportedly expressed misgivings concerning the U.S.-Japan trade deal, and stated on a Fuji TV program {that a} “do-over” of the settlement was not off the desk, referencing Japan’s $550 billion funding pledge.
While Citi analysts have forecast a near-term rally excessive of about 47,000 for the Nikkei 225, they cautioned that Japanese equities aren’t undervalued, with the Topix 12-month ahead price-to-earnings ratio nearing a historic peak of 16 instances.
Analysts anticipate client, protection and export-sensitive shares to profit below a Takaichi government, whereas finance and actual property shares might face headwinds.
Wild playing cards
Takaichi has referred to as for a hardline stance in the direction of China and is additionally in favor of revising Japan’s pacifist structure, particularly Article 9, which renounced Japan’s proper to wage battle.
The former financial safety minister is additionally seen as pleasant towards Taiwan, which might ruffle feathers in Beijing. Taiwan President Lai Ching-te described Takaichi as a “staunch friend of Taiwan” in a post in Japanese on X Saturday, and expressed the hope that the 2 sides “can elevate Taiwan-Japan relations to a new level.”
The late Shinzo Abe (L) and Sanae Takaichi (R) at a science and expertise innovation convention in Tokyo on October 22, 2014.
Toshifumi Kitamura | Afp | Getty Images
Her earlier visits to the controversial Yasukuni Shrine, which honors Japan’s battle useless, together with battle criminals, have drawn criticism from China and South Korea, which see the positioning as an emblem of Tokyo’s wartime aggression.
Takaichi is going to be “very, very careful” in how she communicates her views, particularly on overseas coverage,” Kei Okamura, Managing, director and portfolio manager of Neuberger Berman, told CNBC.
“Her views on China and Korea have additionally been very nicely flagged. But she additionally understands that she has to preserve excellent relations with all these nations, particularly additionally with the United States, simply because all of them have a really huge influence when it comes to Japan’s greatest export locations.”
He added that Takaichi has not abandoned her strong nationalistic views. “This is one thing that I feel we proceed to have a look at extra intently, particularly in yr one and doubtlessly yr two of this administration.”