What Japan’s Political Uncertainty Means for Its Market Rally

Published On Oct 28, 2024, 7:50 AM

The recent parliamentary elections in Japan led to the Liberal Democratic Party losing its parliamentary majority, raising uncertainties about the country's political stability. This has potential implications for Japan's favorable investment environment, which has drawn significant foreign investment in recent years, particularly as economic conditions improved post-Covid-19. The Bank of Japan's recent decision to raise interest rates for the first time in nearly two decades is notable, as is the substantial growth in the Nikkei 225 index, which has increased by nearly 50% since the start of 2023. However, experts are concerned that the lack of a stable government may deter future investments, vital for maintaining Japan's recovery and growth momentum after the pandemic.