Amid controversy within the Liberal Democratic Party (LDP), Japanese Prime Minister Fumio Kishida will step down next month. That will end his three-year run holding the country’s top elected office. It was a relatively brief tenure. Yet Kishida left a mostly positive mark on one of the world’s largest economies and its financial markets.
Data confirms as much. Over the past three years, the MSCI Japan Index traded slightly higher. That said, Kishida’s and the BOJ’s polices to keep the yen weak relative to other major currencies paid off. During that period, the WisdomTree Japan Hedged Equity ETF (DXJ ) surged 82.1%. That bested the S&P 500 by a margin of better than 2-to-1.
In a Monday event hosted by Bloomberg in New York, Kishida discussed some of his economic accomplishments. Those included decades-high wage increases that have benefited ETFs.
Kishida May Have Big Shoes to Fill
At least 10 candidates may seek to replace Kishida. That field may decrease as the process moves along. But global investors and those holding ETFs such as DXJ likely want to see Kishida’s successor maintain and amplify some of the pro-market policies the outgoing prime minister implemented.
“Since the beginning of my tenure as Prime Minister, I have been committed to the drastic expansion of NISA and the advancement of corporate governance reform to decisively accelerate the shift from savings to investments,” he said at the Bloomberg event. “Moreover, I have pushed for a comprehensive reform of the asset management sector and asset ownership, including public and corporate pension funds, to strengthen the whole investment chain in Japan.”
It’s common for politicians, particularly those at the end of their tenures, to boast about economic accomplishments. However, DXJ’s performance backs up the prime minister’s assertions. So does the fact that Japan’s TOPIX Index hit a 34-year record high in 34 years during his tenure.
Engaging Multiple Stakeholders
One of Kishida’s most significant achievements is engaging stakeholders of all stripes to drive an economic- and market-friendly agenda that has rejuvenated a long-slumbering economy.
“I am confident that the Japanese government will continue to engage with financial sector stakeholders and advance this initiative to ensure that the fruits of the initiative are firmly embedded in the Japanese economy and to gain public trust in our policies in Japan and abroad,” he added.
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