Part 11/13:
Investors reacted swiftly: the Nikkei 225 soared by 3%, reaching record highs, while broader indexes gained over 2%. The rally is driven by hopes of an economic policy boost dubbed the Kaii trade—a nod to looser fiscal policy, increased government spending, and a softer yen. This mirrors Shinzō Abe’s late “Abenomics” approach, emphasizing aggressive monetary easing and fiscal stimulus aimed at revving Japan’s sluggish growth.
Markets are betting on a return to expansive policies that could boost exports and investment, though this approach carries inflationary risks and could heighten market volatility. The proposed coalition has already secured commitments to consider lowering the sales tax on food, reduce parliamentary seats, and enhance transparency—all signs of reform-minded intent.