Japan Calls Snap Election on October 27, Market Slips Amid Ishiba Victory Speculation

By IndraStra Global News Team

Cover Image Attribute: Former Defense Minister Shigeru Ishiba, a candidate of Japan's ruling Liberal Democratic Party (LDP) presidential election, speaks during a joint press conference at the LDP headquarters in Tokyo, Japan, September 13, 2024. FRANCK ROBICHON/Pool via REUTER

On Monday, Japan's incoming Prime Minister, 67-year old Shigeru Ishiba, announced that he will call a general election on October 27 following his victory in one of the closest leadership races in the ruling Liberal Democratic Party's history. Observers believe he wants to go to voters quickly, possibly capitalizing on his recent party victory and giving the main opposition, the Constitutional Democratic Party, as little time as possible to prepare under its new leader, Yoshihiko Noda.
The election, set a year early of Japanese general election and ahead of the US presidential election in November, will determine which party controls the lower house of parliament—Shūgiin (衆議院). This early election is significant as it provides an opportunity for the new administration to be judged by the people as soon as possible, as emphasized by Ishiba at a press conference at LDP headquarters in Tokyo. Lawmakers are scheduled to meet tomorrow to confirm him as the next prime minister.
Ishiba emphasized at a press conference at LDP headquarters in Tokyo that it is essential for the new administration to be judged by the people as soon as possible.
Japanese shares took a significant hit, dropping over 4% in early trading on Monday. This was in direct response to the yen's strengthening and the surge in government bonds following Shigeru Ishiba's leadership win, a development that is reshaping the monetary policy landscape. 
The 225-issue Nikkei stock average took a sharp 4.7 percent dive in early trading after Ishiba’s win. However, the Nikkei's lag behind the Topix by more than one percentage point, as reported by The Japan Times, was not unexpected. Kohei Onishi, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, explained that the market's decline was a natural response to the recent rally in previous sessions, which had been fueled by hopes of a Takaichi victory.
Ishiba began selecting government and party officials to join him in the upcoming general election.  Among his picks are two rivals from the leadership race: Katsunobu Kato, named as finance minister, who will be responsible for managing the country's finances and economic policies, and Yoshimasa Hayashi, who will remain in his role as chief cabinet secretary, a key position that includes being the government's top spokesperson and coordinating the work of the cabinet, according to two sources familiar with the appointments.
A close ally of Ishiba, Takeshi Iwaya, a former defense chief, will be appointed as foreign minister. At the same time, Gen Nakatani will return to lead the defense ministry, a role he previously held in 2016, according to sources who requested anonymity due to not being authorized to speak publicly, confirming earlier media reports.
According to a separate source, Yoji Muto, a former junior minister, will head the economy, trade, and industry ministry. However, Sanae Takaichi, the hardline conservative whom Ishiba narrowly defeated by 215 votes to 194 in Friday's leadership election, is not among his selections.
Takaichi's exclusion could present challenges for Ishiba in managing the ruling party, which has been weakened by scandals affecting its public support. Media reports suggesting that Takaichi declined a position could indicate a vulnerability in Ishiba's support base, potentially leading to difficulties ahead. This could include internal party conflicts or a loss of support from Takaichi's followers, remarked Hiroshi Shiratori, a political science professor at Hosei University in Tokyo.
Ishiba chose another rival, Shinjiro Koizumi, as his election campaign chief, alongside former Prime Minister Yoshihide Suga, a Koizumi supporter, who became the party's new vice president. Both joined Ishiba at his press conference on Monday.
At 67, Ishiba secured the LDP leadership on his fifth attempt, with solid backing from grassroots members. However, many of his parliamentary colleagues see him as a maverick due to his frequent opposition to party policies. Before his runoff against Takaichi on Friday, Ishiba apologized to LDP lawmakers for his perceived "shortcomings."
Taniguchi Tomohiko, a former special adviser to Prime Minister Abe Shinzō’s Cabinet, is well-acquainted with numerous civilian officials at the ministry and closely connected to the top leaders of the Japanese Self-Defense Force. When questioned about Ishiba’s tenure as Minister of Defense, their responses are notably uniform—while they provide no detailed remarks, they consistently react with a frown.
With reporting by The Hindu, The Japan Times, Project Syndicate, and Reuters.

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