A sudden turn saw Japanese Prime Minister Shinzo Abe call a snap election on Monday in an effort to “stick to his tough stance toward a volatile North Korea and rebalance the social security system,” according to Reuters.
While Abe does seem to be in a strong position (Reuters points to a survey that shows 44% of voters plan to vote for Abe while the main opposition has only 8%) this is reminiscent of another snap election not too long ago; the UK.
At the time that she called the election, Theresa May seemed to be in a strong position and poised for an even stronger majority. Fast forward to today and her Conservative party is now leading a minority government. This wreaked havoc on the markets and has plunged the UK into instability as they approach their Brexit.
The fear is that Japan could be susceptible to a similar crisis, if not a worse one. If Abe’s plans do not come to fruition, Japan’s economy could be thrown for a loop. The Guardian reports that this outcome is not entirely out of the question. A new part formed by former cabinet minister Yuriko Koike, the Party of Hope, has recently emerged as a potential thorn in Abe’s side.
The Party of Hope’s emergence on the national political scene has thrown the main opposition party, the Democrats, into turmoil. Several Democrat MPs have defected to Koike’s party, while its leader, Seiji Maehara, is reportedly considering allowing Democrats to run as Hope candidates.
If this party emerges as a contender, investors should pay very close attention to the Japanese election. Japanese stocks such as Toshiba have suffered lately from business related reasons, so the last thing the Japanese market needs is a surprise election result. Be sure to stay up to date to avoid a potential British scenario.
To read The Guardian‘s article on the emergence of the Party of Hope, click here.
To read Reuters report on Abe’s call for the snap election, click here.
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