"Kao-shi's trading" makes a comeback.

On Monday, the results of the Japanese House of Representatives election were announced, and the ruling coalition led by Takaichi Sanae won more than two-thirds of the seats. Analysts say that the ruling coalition's unexpected landslide victory paves the way for the Takaichi government to further introduce fiscal stimulus policies, and the "Takaichi trade" may make a comeback in the financial markets - the yen and Japanese bonds may face pressure, and the Japanese stock market may experience upward volatility. Huatai Securities analyst Yi Lu pointed out in a research report that in the short term, a victory for the Liberal Democratic Party may lead to continued weakness in the yen, and if key levels are broken, the possibility of foreign exchange intervention by the Japanese authorities is high. With decreased political uncertainty and additional "double easing", there may be temporary support for the valuation of Japanese risk assets; however, as upward pressure on bond yields has not fully dissipated and trade friction between China and Japan may escalate, volatility in the Japanese stock market may increase. "The combination of Takaichi Sanae's fiscal expansion and slow interest rate hikes increases market concerns about the yen exchange rate, and the yen may continue to weaken after Takaichi's election. Japan has already signalled intervention in the exchange rate, and if the yen exchange rate breaks key levels, the probability of intervention by Japanese authorities will increase," said Yi Lu.