Election throws Japan into turbulent waters
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Refiles to address technical issue.
By Hudson Lockett
HONG KONG, Oct 28 (Reuters Breakingviews) -An election meant to deliver greater certainty has yielded anything but. The Liberal Democratic Party lost its parliamentary majority in the snap election held on Sunday, called by Shigeru Ishiba soon after becoming prime minister last month, who hoped to minimise gains by the opposition and lock in a firm mandate for his scandal-ridden coalition. Now the opposition Constitutional Democratic Party of Japan (CDPJ)has gained 50 seats, largely at the LDP’s expense, leaving all parties short of the necessary 233-seat majority.
The outcome will have every faction in the Lower House scrambling to recalibrate — and markets along with them. The CDPJ, which wants to change the Bank of Japan's 8301.T inflation target from 2% to “above 0%”, has vowed to try and cobble together a coalition to oust the incumbents.
The LDP and its smaller ally, the Komeito Party, will attempt to find new backers, but the largest potential kingmakers have so far ruled out a post-election alliance. Japan’s constitution mandates a special session within 30 days of the election to choose a prime minister, and without a clear path to full control, the LDP may opt to try and govern as a minority.
On that front, Ishiba had already promised in the run-up to the election to deliver a bigger supplementary budget before the end of this year. His party will only face more pressure to deliver fiscal and monetary easing now that it’s on the ropes. That could provide breathing room in the short-term for listed companies under pressure from the push towards higher rates, and may help explain why the Topix .TOPX rose more than 1% in early trading on Monday. But it bodes ill for the government’s capacity to continue the reforms that had put Japan on a path out of stagnation for the first time in decades.
Then there is the question of whether the LDP itself can stay on target. Ishiba will face serious pressure to resign following the electoral rout, throwing the spotlight on his many rivals for party leadership. Chief among these is Sanae Takaichi, a member of the party’s right wing who narrowly lost to Ishiba and argued late last month that it “would be stupid to raise interest rates now”. Should she take control, it could make unlikely bedfellows of the Lower House’s two biggest parties, at least when it comes to interest rate policy. That would be good for Japanese equities, but bad for Japan.
Follow @KangHexin on X
CONTEXT NEWS
The Liberal Democratic Party’s coalition lost its parliamentary majority in the snap election on Oct. 27 called by Prime Minister Shigeru Ishiba, dropping from a combined 279 seats to just 215, per Reuters.
The Constitutional Democratic Party of Japan won the most new seats, rising from 98 to 148 seats but still far short of the necessary 233-seat majority. The parties have 30 days to assemble a majority coalition or the LDP and longtime ally Komeito may attempt to govern as a minority.
Editing by Antony Currie and Ujjaini Dutta
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.
