'Takaichi Rally' Drives Japanese Stock Market to Record Monthly Gain Last Month

Reflecting Expectations for Aggressive Fiscal Policies

The Nikkei 225 Average, Japan's leading stock market index (hereafter referred to as the Nikkei Index), posted its largest-ever monthly gain last month.

AFP Yonhap News Agency

According to the Nihon Keizai Shimbun (Nikkei) on November 1, the Nikkei Index closed last month at 52,411, marking an increase of 7,478 points compared to the end of September. This represents a monthly gain of 16.6%, the second highest since 1976. The record for the highest monthly gain was set in October 1990 at approximately 20%.

The rally in the stock market has been attributed to the administration of Prime Minister Sanae Takaichi, who has supported the monetary easing policies of 'Abenomics' and advocated for aggressive fiscal measures. Prime Minister Takaichi won the Liberal Democratic Party leadership election on October 4. In her first policy speech to the National Diet following her inauguration, she emphasized the goal of a 'strong economy' and announced that the target of raising the defense budget to 2% of GDP would be achieved two years ahead of schedule.

The Nikkei reported, "Foreign investors responded most strongly to policy expectations," adding that "in the four weeks from the first week of October, foreign investors were net buyers of over 3 trillion yen in stocks." Last month, the Nikkei Index recorded the third-highest gain among the Group of Twenty (G20) benchmark indices, following Argentina (58%) and South Korea (20%).

However, the depreciation of the yen has raised concerns. Finance Minister Satsuki Katayama said at a press conference following the Cabinet meeting on October 31, "We are closely monitoring the excessive volatility and disorderly movements in the foreign exchange market with a high sense of alertness." The yen-dollar exchange rate surged to the mid-154 yen range per dollar at one point that day, sending the yen to its lowest level in about eight months since February, prompting comments aimed at reducing market volatility.