Japanese Stocks Rise as Sanae Takaichi Picked as Nation's Next PM

• Japanese stocks surged to all-time highs following the ruling LDP nominating Sanae Takaichi as its new leader
• The Nikkei 225 index rose approximately 4.5% to break above 47,000 points for the first time

Japanese stocks climbed to fresh record highs on Monday following the ruling Liberal Democratic Party (LDP)'s selection of Sanae Takaichi as its new leader and the next Prime Minister of Japan.

The Nikkei 225 index finished nearly 4.5 percent higher on the day, closing above the 47,000 level for the first time. As a result of Sanae's selection, investors began diving back into stocks on Monday.

Sanae, previously a Minister for Economic Security and Minister for Internal Affairs, is widely recognized for her pro-business position on government and innate belief that government spending should be the focus of Japan's ongoing economic growth; she is a fan of former British Prime Minister Margaret Thatcher, particularly Thatcher’s free-market economic model, which has reportedly buoyed investor confidence.

The announcement had the effect of generating strong upward momentum in real estate, technology, and broad utility stocks, as investors and the media now speculate that Okada will undertake policies that encourage capital investment and support infrastructure development.

Analysts also indicate that Sanae's policies may facilitate growth in economic activity by maintaining low borrowing costs along with public investment.

But the rally came amidst currency market volatility. The yen hit an all-time low against the euro and declined 1.7 percent against the US dollar, sparking fears of possible inflationary implications of her economic plans.

Economists Jesper Koll said that the rally was mostly a "knee-jerk reaction," pointing out that although her policies might stimulate business confidence, they can also raise Japan's public debt and further strain the yen.

If confirmed later this month as successor to Shigeru Ishiba, Sanae would be Japan's first female prime minister, a historic milestone and signpost for a possible move toward economic reform and renewed market dynamism.