Markets rise after Japan’s leader steps down
Japanese prime minister Naoto Kan has resigned as president of his Democratic Party of Japan, and thus effectively ended his tenure as Japanese leader, which lasted barely one year.
In a reflection of how turbulent Kan’s 15-month reign was for investors in the country, the Nikkei 225 closed up 0.3% overnight while the Topix rose twice as far.
Kan’s departure means Japan will have a sixth leader in five years – a concerningly regular rotation that ratings agency Moody’s cited in cutting Japan’s sovereign debt rating by one notch, from Aa3 to Aa2, earlier this month.
Moody’s said: “Over the past five years, frequent changes in administrations have prevented the government from implementing long-term economic and fiscal strategies into effective and durable policies.”
Kan struggled to rebuild his nation this year after natural disasters of tsunamis and earthquakes hit, and to convince investors he had a credible economic plan for tackling public debt worth 220% of GDP.
Kan’s leadership has also had only limited success weakening the yen by intervening in FX markets this year, in bids to keep its exporters’ goods affordable.
Kan survived a no-confidence vote in June, at which point he agreed to quit, but only if the parliament passed a second budget, a budget financing bill and legislation promoting renewable energy.
Parliament finished doing this overnight, and is expected to vote a new leader in next Tuesday.