Japan Set for Closest Vote in Years as LDP Vies to Stay in Power
Saturday, Oct 26, 2024 7:41 pm ET
2min read Japan's ruling Liberal Democratic Party (LDP) faces its toughest challenge in over a decade this Sunday, with a parliamentary election that could see it lose its majority for the first time since 2009. The LDP, led by Prime Minister Shigeru Ishiba, is battling a political fundraising scandal and voter concerns over inflation and the rising cost of living.
The LDP's handling of the slush funds scandal has eroded public trust, with over 65% of respondents in a recent Kyodo News survey saying they would consider it when voting. The scandal ultimately cost Ishiba's predecessor, Fumio Kishida, his premiership. Despite this, the LDP remains the top choice for voters, according to the same poll.
Economic issues, such as inflation and the cost of living, are also playing a significant role in shaping voter preferences. Both the ruling and opposition parties have stressed the need to support households, with each voter casting two ballots – one for a candidate in a single-seat constituency and another for a party in proportional representation.
The LDP's policy shifts, including its stance on monetary policy and defense spending, have also influenced voter decisions. Ishiba's perceived backpedaling on his push for creating a NATO-like alliance in Asia and other policy goals has come under intense scrutiny. Strategists see the yen and stocks falling if the ruling coalition loses its majority, as this could make it harder for Ishiba to push for fiscal consolidation and monetary policy normalization.
The election results will likely influence Ishiba's ability to push for fiscal consolidation and monetary policy normalization. A loss of the LDP's majority could weaken the Ishiba administration and potentially lead to another presidential election soon, according to Shinichi Ichikawa, senior fellow at Pictet Asset Management Japan.
If the ruling coalition loses its majority, the yen and stocks could fall, with strategists expecting a similar outcome if the Democratic Party for the People and the Japan Innovation Party become more prominent. A less likely scenario would be if the Constitutional Democratic Party joins the coalition and pushes for policy normalization, resulting in a stronger yen.
A change in government composition could also impact Japan's defense spending and related stocks. Defense stocks have gained on expectations that Ishiba, a former defense minister, would increase spending on security. However, a loss of the LDP's majority could lead to a decrease in defense spending, negatively impacting defense stocks.
Political parties are likely to push for policies appealing to voters, such as minimum wage hikes and measures on inflation, ahead of the upper house election. This could be positive for consumption-related stocks and the broader economy.
In conclusion, the upcoming Japanese election is set to be one of the closest in years, with the LDP vying to stay in power amidst a political fundraising scandal and voter concerns over economic issues. The election results could have significant implications for the yen, stocks, and Japan's defense spending, as well as the broader economy.
The LDP's handling of the slush funds scandal has eroded public trust, with over 65% of respondents in a recent Kyodo News survey saying they would consider it when voting. The scandal ultimately cost Ishiba's predecessor, Fumio Kishida, his premiership. Despite this, the LDP remains the top choice for voters, according to the same poll.
Economic issues, such as inflation and the cost of living, are also playing a significant role in shaping voter preferences. Both the ruling and opposition parties have stressed the need to support households, with each voter casting two ballots – one for a candidate in a single-seat constituency and another for a party in proportional representation.
The LDP's policy shifts, including its stance on monetary policy and defense spending, have also influenced voter decisions. Ishiba's perceived backpedaling on his push for creating a NATO-like alliance in Asia and other policy goals has come under intense scrutiny. Strategists see the yen and stocks falling if the ruling coalition loses its majority, as this could make it harder for Ishiba to push for fiscal consolidation and monetary policy normalization.
The election results will likely influence Ishiba's ability to push for fiscal consolidation and monetary policy normalization. A loss of the LDP's majority could weaken the Ishiba administration and potentially lead to another presidential election soon, according to Shinichi Ichikawa, senior fellow at Pictet Asset Management Japan.
If the ruling coalition loses its majority, the yen and stocks could fall, with strategists expecting a similar outcome if the Democratic Party for the People and the Japan Innovation Party become more prominent. A less likely scenario would be if the Constitutional Democratic Party joins the coalition and pushes for policy normalization, resulting in a stronger yen.
A change in government composition could also impact Japan's defense spending and related stocks. Defense stocks have gained on expectations that Ishiba, a former defense minister, would increase spending on security. However, a loss of the LDP's majority could lead to a decrease in defense spending, negatively impacting defense stocks.
Political parties are likely to push for policies appealing to voters, such as minimum wage hikes and measures on inflation, ahead of the upper house election. This could be positive for consumption-related stocks and the broader economy.
In conclusion, the upcoming Japanese election is set to be one of the closest in years, with the LDP vying to stay in power amidst a political fundraising scandal and voter concerns over economic issues. The election results could have significant implications for the yen, stocks, and Japan's defense spending, as well as the broader economy.
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