Sanae Takaichi listens to a query after visiting the Yasukuni shrine to honour the conflict useless durig the shrine’s spring pageant in Tokyo on April 23, 2015.
Toshifumi Kitamura | Afp | Getty Pictures
Having gained the presidency of Japan’s ruling Liberal Democratic Occasion, Sanae Takaichi is on the verge of turning into the nation’s first feminine prime minister.
Takaichi, a hardline conservative and shut ally of the late Shinzo Abe, mentioned Saturday that she would “work, work, work” to show “individuals’s anxieties about their each day lives and the longer term into hope.”
Her rise comes at a time of financial pressure at dwelling and tense relations overseas — and exams 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 control as a minority.
This additionally signifies that when the Food plan convenes on Oct 15, opposition events might theoretically block Takaichi’s affirmation as prime minister, though analysts say the chance of that is low.
Takaichi’s first job is to safe the assist of at the very least one opposition social gathering to type a working majority, analysis agency BMI mentioned in a word Monday.
Nonetheless, opposition events face a dilemma: becoming a member of the LDP in a coalition might enhance their affect however threat alienating voters dissatisfied with the ruling social gathering.
Ought to Takaichi attain a cope with the opposition, BMI mentioned her authorities 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 Financial institution of Japan’s plan to lift rates of interest, which BOJ Governor Kazuo Ueda beforehand mentioned on Friday that the central financial institution would set charges “without any preconceptions.”
The BOJ ended its unfavourable rate of interest regime in March 2024 and most just lately kept rates at 0.5%.
“We are able to already guess that she will not convey inflation down, as a result of if she’s going to double down on Abenomics of the previous, which implies a sharply weaker yen, which implies extra authorities spending, that arguably means extra inflation,” mentioned William Pesek, the creator of Japanization: What the World Can Study from Japan’s Misplaced Many years.
The LDP selected Takaichi as a result of they felt she was the perfect individual to cope with U.S. President Donald Trump, Pesek, a long-time Asia watcher, instructed CNBC’s “Squawk Box Asia.”
“She was in all probability the best choice to face off with Trump at this very tense second between Trump and the remainder of the world,” Pesek mentioned.
Final week, Takaichi reportedly expressed misgivings concerning the U.S.-Japan trade deal, and mentioned on a Fuji TV program {that a} “do-over” of the settlement was not off the desk, referencing Japan’s $550 billion funding pledge.
Whereas Citi analysts have forecast a near-term rally excessive of about 47,000 for the Nikkei 225, they cautioned that Japanese equities are usually not undervalued, with the Topix 12-month ahead price-to-earnings ratio nearing a historic peak of 16 occasions.
Analysts count on shopper, protection and export-sensitive shares to profit beneath a Takaichi authorities, whereas finance and actual property shares might face headwinds.
Wild playing cards
Takaichi has known as for a hardline stance in direction of China and can be in favor of revising Japan’s pacifist structure, particularly Article 9, which renounced Japan’s proper to wage conflict.
The previous financial safety minister can be seen as pleasant towards Taiwan, which might ruffle feathers in Beijing. Taiwan President Lai Ching-te described Takaichi as a “staunch pal 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 brand new degree.”
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 Pictures
Her earlier visits to the controversial Yasukuni Shrine, which honors Japan’s conflict useless, together with conflict criminals, have drawn criticism from China and South Korea, which see the positioning as an emblem of Tokyo’s wartime aggression.
Takaichi goes to be “very, very cautious” in how she communicates her views, particularly on international coverage,” Kei Okamura, managing director and portfolio supervisor of Neuberger Berman, instructed CNBC.
“Her views on China and Korea have additionally been very nicely flagged. However she additionally understands that she has to keep up excellent relations with all these nations, particularly additionally with america, simply because all of them have a really massive influence when it comes to Japan’s greatest export locations.”
He added that Takaichi has not deserted her sturdy nationalistic views. “That is one thing that I believe we proceed to have a look at extra intently, particularly in yr one and doubtlessly yr two of this administration.”
