| 27 May 2024, Monday |

Japan PM Suga says he won’t run in leadership race to focus on COVID-19 measures

Japanese Prime Minister Yoshihide Suga said on Friday he had decided not to run in the ruling Liberal Democratic Party’s leadership race and wanted to focus instead on fighting the COVID-19 pandemic.

“Running in the race and handling coronavirus countermeasures would have required an enormous amount of energy,” he told reporters.

Japan’s TOPIX stock index rose 1.6 percent to a 30-year high in afternoon trade after the news and the Nikkei jumped about 1.8 percent. The Japanese yen bobbled higher before drifting a fraction lower to 110.025 per dollar.

Here are some initial reactions to the news;

Jim McCafferty, Joint Head Asia Equity Research, Nomura, Hong Kong

“I guess we are possibly back to the politics we have known in Japan pre-Abe. If you look at post-war Japanese politics the average tenure of prime ministers has been a lot less than four years.

“From a stock market point of view we know that the LDP has got a firm position and there isn’t really any credible opposition…there’s quite a bit of certainty around issues such as corporate tax or anything that could affect share prices.

“The market reaction might be a combination of other factors, on currency, on the US, on the rest of the world. I think the political equation is quite modest. Investors in Japanese equities are used to frequent changes of Prime Minister within an LDP context.”

Moh Siong Sim, Currency Analyst, Bank of Singapore, Singapore

“It really depends on who is next and who is running for the position. From a market practitioner standpoint the question to ask is whether policies will change, and if policies aren’t changing then it doesn’t matter too much to the market.

“It doesn’t seem that it’s about policies, it seems that it’s about personalities. For dollar/yen, it’s mostly a US dollar side story.”

Kay Van-Petersen, Global Macro Strategist, Saxo Capital Markets, Singapore

“It should not be a surprise, Abe was a once in a multi-generation leader and it will be a while before Japan sees that form of leadership again.

“We can expect fiscal and political gridlock for future administrations, which is not constructive for long-term policy and monetary policy is tapped out with … they are all out of bullets and Godzilla (Abe) has left the building.”

Koichi Nakano, Political Science Professor, Sophia University

“Now that it’s an open race, anyone can run … The question is what will (former premier Shinzo) Abe and (Finance Minister Taro) Aso decide. They must be thinking whom to back – they want someone who is both popular and a puppet.”

“(Administrative Reform Minister Taro) Kono may decide to run.”

“(Former defense minister Shigeru) Ishiba – does he have the 20 signatures needed to run? He has 17 in his faction, in contrast to (former foreign minister Fumio) Kishida, who has a bigger faction and has made himself credible as a candidate. Ishiba has come across as indecisive.”

“Kishida is the top runner for the time being but that doesn’t mean his victory is assured.”

Daiju Aoki, Chief Japan Economist, UBS Sumi Trust Wealth Management, Tokyo

“It was a surprise, but it provided more certainty and forward-looking prospects rather than uncertainty as the market had been informed of Kishida’s policies (at his Thursday press conference) such as expansionary fiscal policy, support for household incomes and new measures to combat the coronavirus.”

Toru Suehiro, Senior Economist at Daiwa Securities, Tokyo

“Stock prices are rising based on a view that the chance of LDP’s defeat in the general election has diminished because anyone other than Suga will be able to regain popularity.”

“Regardless of who runs for the party leadership race with what kind of policy manifestos, the market seems to favor the increased prospect that the current LDP administration will continue stably.”

  • Reuters