Japan’s ruling coalition set to lose parliamentary majority, election exit polls show

TOKYO – Japan’s ruling coalition is set to lose its parliamentary majority, exit polls for the Oct 27 general election showed, raising uncertainty over the make-up of the government of the world’s fourth-largest economy.

A poll by national broadcaster NHK showed the Liberal Democratic Party (LDP), which has ruled Japan for almost all of its post-war history, and junior coalition partner Komeito were set to win between 174 and 254 of the 465 seats in the Lower House of Japan’s Parliament.

The main opposition Constitutional Democratic Party of Japan (CDPJ) is predicted to win 128 to 191 seats.

A poll by Nippon TV showed the ruling coalition would win 198 seats to the CDPJ’s 157, both well short of the 233 seats needed to reach a majority, as voters punished Prime Minister Shigeru Ishiba’s party over a funding scandal and inflation.

“I think these results are the outcome of an unsparing verdict on the LDP… coming from various factors, including how we have not been able to settle the issue of political money issue from two winters ago,” Mr Shinjiro Koizumi, the LDP’s election chief, told NHK.

Losing the majority

in the Lower House would force Mr Ishiba, in office for just a month, into power-sharing negotiations with smaller parties, bringing uncertainty in some policy areas, although no polls forecast the LDP being ejected from power.

Political wrangling could roil markets and be a headache for the Bank of Japan (BOJ), if he chooses a partner that favours maintaining near-zero interest rates when the central bank wants to gradually raise them.

“He’ll be considerably weakened as a leader, his party will be weakened in the policies that it particularly wants to focus on, because bringing in a coalition partner will cause them to have to make certain compromises with that party, whatever party it may be,” said Dr Jeffrey Hall, an expert on Japanese politics at the Kanda University of International Studies.

Mr Naka Matsuzawa, chief macro strategist at Nomura Securities, said “that’s basically the scenario for ‘sell Japan’”, as investors ponder how the outcome could affect fiscal and monetary policy.

Japanese shares fell 2.7 per cent last week on the benchmark Nikkei index.

Coalition headaches

Nine days before American voters choose a new president for the US, Japan’s general election appears likely to show that Mr Ishiba miscalculated in going to the voters for a verdict on the LDP’s scandal over unrecorded donations at fund-raisers.

After purging some LDP members, he says he considers the case closed and has not ruled out giving government posts to disgraced politicians, possibly angering voters, experts say.

Potential coalition partners could be the Democratic Party for the People (DPP) and the Japan Innovation Party, but both propose policies at odds with the LDP line.

The DPP calls for halving Japan’s 10 per cent sales tax until real wages rise, a policy not endorsed by the LDP, while the Innovation Party has pledged tougher donation rules to clean up politics.

The Innovation Party opposes further rate hikes, and the DPP leader has said the central bank may have been hasty in raising rates, while the BOJ wants to gradually wean the world’s fourth-largest economy off decades of monetary stimulus.

“The DPP is focused on ultimately making the country better and ensuring financial resources are allocated more appropriately, so that’s why I decided to vote for them,” said Mr Keisuke Yoshitomi, a 39-year-old office worker, after casting his vote at a polling station in central Tokyo on Oct 27.

Also voting at the same station on a sunny morning, Mr Takeshi Ito, a 38-year-old manager at an infrastructure company, said he would stick with the LDP, which has governed Japan for almost all of the post-war era.

“Even if I were to switch to an opposition party, it’s still unclear whether they could push forward reforms, and I don’t know if I can trust them or not at this point,” Mr Ito said.

“Therefore, I want to see the party that has been in power continue to move forward.”

Almost 40 per cent of voters say their top concern is the economy and cost of living, according to a poll by public broadcaster NHK. It found 28 per cent want a tax cut and 21 per cent hoped to see a continued rise in their wages.

Various parties have pledged to raise wages in a move that may win votes but also threatens smaller businesses that are struggling to keep up with rising costs. REUTERS