Abe’s ruling LDP humbled by upstart party’s Tokyo win

By Bloomberg

TOKYOJapanese Prime Minister Shinzo Abe’s party suffered a heavy defeat at the hands of an upstart out t in elections for Tokyo’s assembly, an exit poll and survey by public broadcaster NHK showed.

Tokyo Governor Yuriko Koike’s Tomin First (Tokyo Residents First) party was projected to win 48-50 seats in the 127-seat assembly, compared to 13-39 for Abe’s Liberal Democratic Party (LDP).

That could end up being the fewest number of seats for the LDP ever in the capital. With the Komeito party — which Koike has teamed up with for the election — forecast to get 21-23 seats, the popular governor is set to gain a majority.

Going into the election Koike’s party had only six seats in the assembly, compared to 57 for the LDP, according to the assembly’s office.

A spate of scandals has eroded support for Abe, and yesterday’s loss in Tokyo may stir criticism within his party, where potential rivals are positioning themselves to end his run as Japan’s third-longest serving premier since World War II. It could also hurt the party’s chances in a national election due next year. In 2009, a big loss for the LDP in Tokyo preceded a landslide general election defeat months later.

Koike, who defected from the ruling party last month, has campaigned on a platform of open government, and cutting wasteful spending in the city of 13.7 million, which accounts for about a fifth of Japan’s economy. The LDP has sought to portray her as indecisive for delaying the relocation of the iconic Tsukiji fish market over pollution concerns and insisting on reviewing the ballooning cost of the 2020 Olympics.

“People appreciated the results we have achieved by taking the point of view of Tokyo residents,” Koike said after the results started to come out. “I think this is an opportunity to make the Tokyo assembly what it should be.”

Abe, 62, has suffered a series of gaffes by his ministers and allegations of cronyism over government support given to a school run by a friend. More popular colleagues such as Shinjiro Koizumi, the 36-year-old son of a former premier, took a prominent role in the Tokyo campaign.

A loss of Tokyo for the LDP could weigh on Japanese equities and lift the yen against the dollar over the short-term, according to Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. The outcome could prompt Abe to increase fiscal stimulus, he said in an emailed note before the results were released.

In a speech in Tokyo last Wednesday, Abe apologised for the angry exchanges over scandals that dominated the last parliamentary session, and vowed to fight on. “A castle that takes three years to build can be destroyed in a day,” he said.

Demonstrators heckled Abe during his final stump speech on Saturday evening, calling for him to “resign” or “go home”.

Koike, 64, is a former television journalist fluent in English and Arabic who has served as environment minister and defence minister, as well as an LDP executive. A big win would give her momentum to take her more populist message to the national stage.

In the 2009 Tokyo poll, the LDP and its coalition partner Komeito lost their dominant position in the assembly — months before a resounding defeat to the Democratic Party of Japan in a general election that led to more than three years in opposition. This time, however, Abe doesn’t have to call a vote until December 2018, a few months after the LDP is due for a formal leadership election. — Bloomberg