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POLITICAL RISK: Japan Political Uncertainty Rises As LDP Loses Majority

POLITICAL RISK
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Japan faces a period of political uncertainty after weekend lower house elections from Sunday showed the LDP coalition had lost its majority. 

  • Local media has reported that the LDP has fallen to 191 seats (losing 56), while its partner, the Komeito Party had 24 seats, so a total of 215 seats, short of the 233 required for a majority (per Yomiuri, see this link).
  • The second largest holder of seats is the Constitutional Democratic Party of Japan, which gained 50 to bring its total to 148 seats. Its leader, Yoshihiko Noda will reportedly discuss forming coalitions to remove LDP from power, but is likely to struggle to get to 233 level required.
  • Some coalition possibilities for the LDP include the Democratic Party for the People (DPP) see this link. Although what comprises on policy that need to maintain a coalition will be key market watch points.
  • The DPP reportedly said yesterday that they won't join an LDP coalition.
  • Another possibility is the Innovation Party, which reportedly won 35 seats. Again differences in policy outcomes are likely to be in focus. This party opposes further BoJ rate hikes.
  • Still these minor parties may help the LDP coalition stay on as a minority government.  
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Japan faces a period of political uncertainty after weekend lower house elections from Sunday showed the LDP coalition had lost its majority. 

  • Local media has reported that the LDP has fallen to 191 seats (losing 56), while its partner, the Komeito Party had 24 seats, so a total of 215 seats, short of the 233 required for a majority (per Yomiuri, see this link).
  • The second largest holder of seats is the Constitutional Democratic Party of Japan, which gained 50 to bring its total to 148 seats. Its leader, Yoshihiko Noda will reportedly discuss forming coalitions to remove LDP from power, but is likely to struggle to get to 233 level required.
  • Some coalition possibilities for the LDP include the Democratic Party for the People (DPP) see this link. Although what comprises on policy that need to maintain a coalition will be key market watch points.
  • The DPP reportedly said yesterday that they won't join an LDP coalition.
  • Another possibility is the Innovation Party, which reportedly won 35 seats. Again differences in policy outcomes are likely to be in focus. This party opposes further BoJ rate hikes.
  • Still these minor parties may help the LDP coalition stay on as a minority government.