Japan’s Premier Suga Steps Down, Two Former Foreign Ministers Lead Replacement Race

Source: Bloomberg

Japanese Prime Minister Yoshihide Suga set forth plans to resign after failing to control the country’s COVID-19 surge, with two former foreign ministers are seen as leading the pack to take over. JPY USD up +0.24%, Nikkei 225 up +2.05%

• In a shocking announcement, Suga stated that he could not campaign for reelection as a leader of the Liberal Democratic Party while struggling with the virus, ending his reign almost a year after it started.
• The next LDP leader is virtually guaranteed to become prime minister due to the party’s dominance in Japan’s parliament.
• Japanese stocks jumped on hopes the next prime minister would support expanding economic stimulus, with at least one contender for the job, former Foreign Minister Fumio Kishida, supporting more spending to soften the pandemic’s effects.
• Suga’s resignation increased speculation about potential replacements. Vaccine czar Taro Kono plans to seek the LDP presidency.
• Kono and Kishida have the first-hand experience in negotiating with the United States and China. 
• Suga became the premier as a diplomatic novice, and as a premier, offered support for President Joe Biden as he sought allies for united efforts against China’s security threats.