Context:

Sanae Takaichi is poised to become Japan's first female prime minister following an alliance with the Japan Innovation Party, paving the way for her premiership despite the coalition falling short of a parliamentary majority. The partnership will provide Takaichi with essential backing, as she only requires a majority of votes cast to secure her position in the upcoming parliamentary vote. Investors are reacting positively to her anticipated economic policies, which include fiscal expansion aimed at alleviating inflation pressures, resulting in a surge in Japan's stock market. However, her collaboration with the Ishin party, known for advocating smaller government, may limit her proposed spending initiatives. Takaichi's political agenda also includes revising Japan's postwar constitution to enhance military recognition and implementing stricter immigration policies, alongside her opposition to progressive social reforms.

Dive Deeper:

• Sanae Takaichi, a hardline conservative, is on the brink of becoming Japan's first female prime minister, with critical support coming from the Japan Innovation Party. This alliance comes after the collapse of the long-standing coalition with Komeito, which had significant implications for Takaichi's leadership ambitions.

• The coalition agreement between Takaichi's Liberal Democratic Party (LDP) and the Japan Innovation Party will yield a combined total of 231 seats in the lower house of parliament, just shy of a majority. This positioning allows Takaichi to likely achieve the necessary votes for her premiership despite needing to negotiate further support from other opposition groups for future governance.

• Market reactions to the coalition news have been favorable, with investors optimistic about Takaichi's proposed economic policies, which aim for higher government spending to combat rising inflation. The immediate consequence has been a significant increase in the Nikkei share index, highlighting the market's confidence in her leadership.

• Takaichi's policy platform includes controversial proposals such as increasing defense spending and amending Japan's pacifist constitution to formally acknowledge the military's role. Her stance on these issues, particularly regarding relations with China and historical contexts, could provoke both domestic and international scrutiny.

• While Takaichi advocates for fiscal expansion, her partnership with the Ishin party may pose challenges to her spending plans due to their preference for reduced government expenditure. Additionally, her conservative views extend to social policies, where she opposes reforms such as allowing women to retain their surnames after marriage, citing a desire to uphold traditional values.