Japan’s ruling Liberal Democratic Party (LDP) led by Prime Minister Sanae Takai secured a landslide victory in Sunday’s lower house election, winning a “supermajority” of two-thirds of the seats for the first time since World War II. On Monday (February 9th), the Nikkei 225 index soared to a historic high, breaking through the 56,000-point mark in early trading.
In early Monday trading, the Nikkei 225 index rose by 3.4% to 56,083.14 points, while the TOPIX index increased by 2.5% to 3,792.05 points.
Among the top gainers in the Nikkei 225 index were Aozora Bank, rising by 2.7%; followed by Tokyo Gas, up by 2.7%; and JFE Holdings, which gained 2.5%.
The election victory of the LDP under the leadership of Prime Minister Sanae Takai is seen as a significant mandate to address issues related to the cost of living and national security. The decisive majority win paves the way for increased spending and tax cuts by the current government.
The election results showed that the LDP, led by Sanae Takai, won 316 out of 465 seats in the lower house of parliament.
In an interview with NHK television on Sunday evening, the Prime Minister stated, “I always feel uneasy about making significant changes to our major policies without seeking the trust of the people.”
The number of early voters before Sunday’s election reached a record high. The nationwide early voting turnout was 27,017,098 people, an increase of about 6 million compared to the previous lower house election in 2024, accounting for 26.10% of all eligible voters.
According to Reuters, Jamie Halse, Managing Director of Sydney-based Senjin Capital, stated, “Reducing food consumption tax is beneficial for domestic consumer spending; increasing defense spending is favorable for defense stocks.”
He added, “The real question is, given the huge mandate of a two-thirds majority vote, what other measures can be taken now. Voters clearly support the ‘Takai economy,’ so there may be announcements of further measures.”
The MSCI Japan Index outside of the Asia-Pacific region rose by 1.0%, while the South Korean technology stock index surged by 3.9%.
S&P 500 index futures rose by 0.4%, Nasdaq index futures rose by 0.6%, bouncing back by more than 2% last Friday, breaking the trend of significant declines.
Sanae Takai, a outspoken politician, heavy metal drummer, and motorcycle enthusiast, has garnered widespread attention with her election victory, particularly among female voters. Previously closely associated with the LDP’s far-right faction, she has now gained broad public support, indicating her ability to demonstrate pragmatism as a leader, forging close ties with other Asian countries, and addressing sensitive issues such as immigration and fiscal deficits.
It is expected that the ruling coalition under Sanae’s leadership will prioritize measures to tackle the cost of living in Japan. During her campaign, she mentioned that the LDP is considering suspending the current 8% consumption tax on food for two years, despite an estimated annual revenue loss of ¥5 trillion. She reiterated her government’s commitment to a “responsible and proactive fiscal policy.”
During the NHK interview on Sunday, she remarked, “The vast majority of political parties support reducing the consumption tax rate. The LDP has also clearly promised this… I firmly believe that we need to accelerate discussions on this major issue.”
Her government will continue efforts to relax restrictions on defense equipment exports and seek to increase defense spending. Against the backdrop of ongoing tensions between China and the U.S., Takai’s diplomatic relations with Beijing and Washington will be closely watched.
The Prime Minister will hold a press conference on Monday to discuss the election results and future policies.