Yen Strengthens, Japanese Stocks Drop as DPJ Sweeps to Power

By Masaki Kondo

Aug. 31 (Bloomberg) -- The yen strengthened after the Democratic Party of Japan won yesterday’s national election by a landslide, marking an end to single-party government that lasted almost unbroken for half a century. Japanese exporters of cars and electronics declined in stock trading.

The yen appreciated to 132.42 per euro in Tokyo from 133.85 in New York on Aug. 28, and strengthened to 92.72 per dollar from 93.60. The Nikkei 225 Stock Average fell 0.4 percent to 10,492.53 at the 3 p.m. close on the Tokyo Stock Exchange, reversing an earlier gain of 2.2 percent. Bonds rose.

“Some are saying the market has fully reflected the change of government, but the change is too big to be priced in,” said Hisakazu Amano, who helps oversee the equivalent of $18 billion at T&D Asset Management Co. “The impact of the DPJ victory on company earnings is still uncertain and investors can’t decide what to buy or sell.”

The DPJ routed the Liberal Democratic Party in yesterday’s vote, capturing 308 of 480 lower-house seats, national broadcaster NHK said. The DPJ has pledged to revive an economy emerging from its deepest recession since World War II by boosting child-care spending, cutting taxes and limiting the power of bureaucrats.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.