The world’s investment journals are bemoaning Japan’s revolving prime ministers and lack of long-term leadership. The question is where in the world this kind of political void is not a factor.
Japan, most notably, has elected 31 prime ministers in the last 66 years, with Yoshihiko Noda, formerly the country’s finance minister, taking the reins from Naoto Kan.
Kan, in turn, ruled Japan for a little over a year, while his predecessor Yukio Hatoyama ran the country for barely eight months.
In all, postwar prime ministers have lasted about two years apiece, but the last two “lost” decades have been especially intense in terms of turnover at the top.
Since 1989, the average tenure for Japanese prime ministers has shrunk to about 31 weeks.
Japanese stock prices have ebbed and flowed with the necessarily short-term policies of these politicians — right now the Japan fund EWJ is down 0.97% year to date — but the structural problems facing the country have arguably not been addressed.
Noda is known as a relatively hawkish figure who wants to raise taxes in order to attack Tokyo’s $2.2 trillion in foreign debt, not to mention total indebtedness weighing in at a staggering 225% of GDP.
In the face of calls for the government to borrow more to fund post-earthquake rebuilding, this makes him a natural favorite of traders looking for austerity and a return to Japan’s reputation for fiscal discipline.
Meanwhile, his pro-nuclear attitude makes him a friend of uranium stocks and funds. We have already seen tickers like URA get a boost from Noda’s election:
And as for whether Japan is somehow unique in having a leadership void, the same could be said of just about every other developed nation out there.
By design, the European Union’s presidency revolves every six months, while individual euro governments can change roughly as often — Belgium still has no elected government after 14 months since the last one collapsed.