Key Facts
• September 7: Prime Minister Shigeru Ishiba announced his resignation.
• July 20: Ishiba’s administration suffered a major defeat in the House of Councillors election.
• September 5: Japan’s TOPIX year-to-date return reached approximately 10%, matching the S&P 500.
• Two potential successors: Shinjiro Koizumi and Sanae Takaichi.
• Koizumi: Limited focus on macroeconomic stabilization, unlikely to implement large-scale tax cuts.
• Takaichi: Advocates for significant tax cuts and economic policy shifts.
• Japan’s stock market could surpass U.S. returns with policy changes.
• Upcoming Liberal Democratic Party (LDP) leadership election likely to use full-spec voting system.
• Economic policy under Takaichi could revive “Abenomics” and stabilize the yen.
• Koizumi’s policies may lead to continued reliance on U.S. stock market trends.
Summary
Prime Minister Shigeru Ishiba’s resignation on September 7 has set the stage for a pivotal leadership election within the Liberal Democratic Party (LDP). Two frontrunners, Shinjiro Koizumi and Sanae Takaichi, represent contrasting economic visions. Koizumi’s limited focus on macroeconomic stabilization may result in policies similar to Ishiba’s, while Takaichi’s approach, influenced by former Prime Minister Shinzo Abe, could include significant tax cuts and a revival of “Abenomics.” Japan’s stock market, which has matched U.S. returns so far in 2025, could outperform with the right policy shifts. The LDP leadership election, expected to use a full-spec voting system, will determine the nation’s economic trajectory and its appeal to global investors.
