On September 30, 2024, Japan's political landscape shifted as Yoshihide Ishiba was appointed as the new leader of the ruling Liberal Democratic Party (LDP), succeeding Fumio Kishida, who resigned amid a scandal involving illicit funds that tarnished his reputation and popularity.
The announcement of Ishiba's leadership was met with immediate negative reactions from financial markets, with the Nikkei index in Tokyo plummeting nearly 4% at the start of the week. Investors are apprehensive about Ishiba's previous statements supporting potential interest rate hikes by the Bank of Japan, raising fears of increased taxation.
In contrast, stock markets in Hong Kong and Shanghai experienced significant gains on the same day, buoyed by China's economic stimulus measures aimed at revitalizing its struggling real estate sector. The Hang Seng index surged by 3.14%, or 647.68 points, reaching 21,279.98, while the Shanghai Composite Index rose by 5.54% and the Shenzhen Composite Index increased by 5.18% during morning trading.
These gains followed a series of stimulus actions by Chinese authorities, including easing housing purchase restrictions in major cities and a directive from the central bank for financial institutions to lower mortgage rates. Consequently, shares in real estate companies soared, with Kaisa Group rising nearly 60%, Sunac over 16%, and Fantasia more than 30%.
The developments highlight the interconnectedness of global markets and the potential implications of Japan's political changes on economic stability in the region.