As stocks fell on a strong yen and worries about impending tax rises, Japan’s incoming prime minister, Shigeru Ishiba, announced on Monday that he intended to hold early elections for October 27.
Ishiba emerged victorious in the governing party’s leadership contest and is scheduled to take office as premier on Tuesday.
Ishiba express support for the Bank of Japan’s efforts to increase interest rates and has stated that “there is room” for an increase in corporation taxes.
As markets closed on Friday, right-wing candidate Sanae Takaichi was the clear favorite to win the Liberal Democratic Party (LDP) leadership race. The LDP has ruled virtually continuously for decades.
The possibility of Takaichi winning pushed equities higher and the currency down since she is a supporter of former prime minister Shinzo Abe’s unconventional “Abenomics” economic policies, which include ultra-low rates of interest and lower taxes.
An ardent patriot, Takaichi would have become the first female prime minister in a nation where males still control industry and politics.
Ishiba, 67, is a harsh critic of Abe, and the yen surged to almost 142 per dollar from about 146.50 after his dramatic triumph on his fifth try.
On Monday, investors sold off their equities, with exporters suffering the most.
The Nikkei index ended the day down by 4.8%, with Toyota falling 7.6% and Mitsui Fudosan, a real estate business, falling 8.7%.
