Asian financial markets experienced dramatic fluctuations at the beginning of the week. On Monday, Tokyo’s Nikkei 225 index dropped nearly 5%, while Chinese stocks surged following announcements of new economic stimulus measures.
In Japan, the stock market fell as the Liberal Democratic Party selected former Defense Minister Shigeru Ishiba as the successor to Prime Minister Fumio Kishida, who is set to resign on Tuesday. Ishiba, who supports increasing interest rates from their current near-zero levels and potentially raising corporate taxes, is viewed as less favourable to the markets compared to his main rival, Economic Security Minister Sanae Takaichi, whom he defeated in a run-off vote last Friday. By midday, the Nikkei was down 4.7% at 37,956.32.
Ishiba has endorsed Kishida’s “new capitalism” initiatives aimed at a more equitable distribution of wealth, but rising prices have hindered these efforts by deterring consumer spending.
Conversely, in Hong Kong, the Hang Seng index rose 3.3% to 21,321.97, and the Hang Seng Mainland Properties Index increased by 8.6%. The Shanghai Composite index also jumped 5.7% to 3,263.59. These gains occurred just before a national holiday week celebrating 75 years of communist rule in China, with the markets in mainland China scheduled to close from Tuesday through October 7.
