Japan Investors Are Glad to See the Back of an Unpopular Leader
(Bloomberg) -- Stock markets soared in Tokyo after the shock resignation of Prime Minister Yoshihide Suga, as investors expressed hope that a new leader would lift the cloud of uncertainty that has depressed sentiment in equities for months.
Despite high polling numbers when he took over from Shinzo Abe a year ago, Suga has become deeply unpopular with the Japanese public. While Japan largely escaped the pandemic last year, Tokyo and many other regions have been under a state of emergency for most of 2021, as the country has battled successive waves of Covid-19.
Suga’s low approval rating has weighed on Japanese equities, said Hiroshi Namioka, the chief strategist at T&D Asset Management Co. Investors and ruling party politicians feared the consequences if he led the party into a forthcoming general election.
Polling shows most don’t rate his response to the pandemic, which has consumed political discourse in Japan and prevented him from carrying out other policies. A turning point came in winter, when he was roundly criticized for what was seen as a late response to a growing wave of Covid cases. Stocks have been largely rangebound for much of the year as the country’s vaccination campaign and economic reopening lagged those of the U.S. and Europe -- something Suga took the blame for.
Investors are also hopeful that Suga’s successor, whoever it might be, will spend big. Former Foreign Minister Fumio Kishida, who plans to run for ruling party leader, has vowed to spend tens of trillions of yen to tackle the virus and also proposed establishing a health crisis management agency to manage infectious disease response.
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