Japan's Abe resigns over ill-health; Nikkei slumps 2%
Updated : 10:57
Japan’s Prime Minister Shinzo Abe resigned on Friday, citing the return of a chronic bowel condition that had previously forced him out of office.
"I cannot be prime minister if I cannot make the best decisions for the people. I have decided to step down from my post," he told reporters.
“In politics, the most important thing is to produce results. For seven years and eight months, I have done my best to get results, but I have been struggling with my illness and I need treatment.”
News earlier on Friday that Abe was going to quit sparked an immediate sell off on Japan’s stock market, with the blue-chip Nikkei 225 index losing as much as 2% before finishing the day 1.4% lower and moving against the general trend in Asia-Pacific markets, which ended the week higher.
Worries about Abe’s health grew this week following two visits to hospital. The 65-year-old suffers from ulcerative colitis which forced him to step down from his first term in 2007. He has also faced criticism over his handling of the coronavirus pandemic.
A conservative and nationalist, Abe pursued an economic policy known as "Abenomics", with its "three arrows" of easy monetary policy, fiscal spending and reforms. He also wanted to change the country's pacifist constitution.
FXTM analyst Han tan said global investors would eye the resignation "through the lens of policy continuity, with questions framed around Abenomics in particular".
"This leadership transition arrives as the Japanese economy is still dealing with the negative impact from the pandemic. Longer-term concerns may also arise over how Japan can navigate ties with major economies such as the US and China in a post-Abe era."
"Such a doubt-mired outlook lends itself to this knee-jerk sell-off mode in Japanese assets, with USDJPY set to face more volatility in the short-term. However, any instability and volatility that may arise from a leadership transition are expected to be transitory once global investors have a firmer grasp on Japan’s policy outlook."