Japan’s Nikkei 225 stock index jumped 1% on Monday to its highest in more than 20 years after Prime Minister Shinzo Abe secured a resounding win in a general election, indicating the Bank of Japan’s easy monetary policy will continue.
While Typhoon Lan, which battered Japan on Sunday as voters went to the polls, had delayed some vote counting, Abe’s coalition had secured 309 seats in the 465 seat parliament, according to Monday morning official tallies.
That returns the Liberal Democratic Party and its coalition partner to power with a so-called supermajority in the Diet (parliament).
“This should extend the lifespan of ‘Abenomics’, including the BOJ’s mega stimulus,” wrote analysts at the Blackrock Investment Institute, cited in a Reuters report.
The supermajority will also give him the mandate to pursue a change in Japan’s pacifist constitution, which Abe argues is needed because of North Korea and its threat to attack Japan.
Opponents say tinkering with the constitution – which was imposed on Japan after World War II by US occupying forces – opens the door to Japanese troops being deployed overseas. That for some is a raw nerve even 72 years after the country’s crushing defeat in war.
Article 9 of the constitution renounces war and states Japan will not maintain military forces and other war potential.
Japan, of course, has an air force, army and navy named the Self Defence Forces, which creates an ambiguous status for the SDF that Abe says needs to be changed.
The prime minister has said he wants to make the changes by 2020 and said on Monday he will encourage a nationwide debate on the issue beforehand.
Regardless of that outcome, the win on Sunday extends Abe’s five-years in office and makes it as certain as certain can be in politics that he’ll win another three-year stint as LDP leader next September. That means he is on track to become Japan’s longest-serving prime minister.
The LDP is claiming the win as an endorsement of their leader’s so-called Abenomics economic policy. This aims to drag Japan out of decades of deflation using monetary and fiscal policy, married to industrial restructuring and reform.
However, after his five years in power Abenomics has its share of critics for not doing enough on the reform front to tackle vested interests and improve corporate governance in Japan.
On the corporate governance front it’s clear much needs to be done.
Japan Inc. has taken a battering in recent weeks by revelations Kobe Steel Ltd. was falsifying manufacturing data and Nissan Motor Co. had unqualified staff signing off on vehicle inspections.
They join a long list of Japanese companies caught fiddling the books in recent years – Olympus (accounts) Toshiba (accounts), Nuclear plant operators (safety checks) to mention a few – and all on the LDP’s watch.
Abe staying on a prime minister will also put him back in parliament where his popularity took a nosedive earlier this year over allegations he’d been using his clout to extend favors to associates: Cronyism in most dictionaries.
The prime minister was getting an uncomfortable grilling in the Diet over the allegations before he called the snap election and dissolved the Diet. That questioning will likely continue.
“Nobody that has been associated with any of these scandals is going to be kicked out, so for any opposition party coming in the same cast of villains will be available to them in budget committee sessions because you can ask any question you want in budget committee sessions,” said Michael Cucek, adjunct professor at Temple and Waseda universities in Japan.
Abe needs to be concerned about that, said Cucek in a press conference before the election.
“Consider the number of people voting for the LDP in this election. There are 106 million voters and he’ll get 17 million to 18 million or less than 17%. That’s not much of a mandate, so he needs to be careful.”
His initial main challenge in the election came from the recently established Party of Hope led by popular Tokyo Governor Yuriko Koike.
Despite the initial buzz surrounding the Party of Hope it quickly fizzled out when Koike made clear she would stay on as governor and not challenge Abe for the top job.
The Party of Hope never had a hope, said Cucek, which was demonstrated at the voting booths where it won just 49 seats at the latest count.
With Abe’s win and the Party of Hope’s loss largely predicted in newspaper opinion polls before the election, the dark horse in the vote was the Constitutional Democratic Party of Japan or CDPJ.
This group, like the Party of Hope, mostly comprised the remnants of the opposition Democratic Party that effectively disbanded itself before the election.
The CDPJ, headed by Yukio Edano, won 50 seats and is as the name suggests largely opposed to Abe’s plan for constitutional change. It may emerge as Japan’s largest opposition party.
After Typhoon Lan’s torrential rains and gale force winds on Sunday, Tokyo was enjoying blue skies and fresh breezes on Monday morning, giving Abe his day in the sun before he gets down to plenty of unfinished business.