Japanese stocks hit record highs this week due to the “Takaichi trade,” but banking sector underperformed as investors anticipated Sanae Takaichi as the new leader. Takaichi’s support for fiscal stimulus and looser monetary policy could benefit banks, despite initial market reactions. Regional banks may benefit from Takaichi’s focus on economic revitalization in Japan’s regions. Bank of Japan’s interest rate hikes could affect bank profits, but their bull run may continue due to expansionary policies. Takaichi’s ability to influence BOJ is limited, and the central bank’s decision-making may be influenced by the yen’s decline. Takaichi would need to navigate challenges, including securing fiscal support from the Ministry of Finance.

Read more at Yahoo Finance: Japanese banks well placed to join Nikkei’s Takaichi euphoria, say analysts