Japan's next prime minister…'public sentiment' Takaichi 'party sentiment' Koizumi

Liberal Democratic Party leadership election starts

Takaichi leads in national opinion polls

Koizumi leads in intra-party support

"If Takaichi is elected, stock prices will rise

If Koizumi is elected, the yen's value is expected to rise"

The ruling Liberal Democratic Party's leadership election opened on the 22nd with the start of candidate registration. Five people entered the race, including Sanae Takaichi, former minister in charge of economic security (64), and Shinjiro Koizumi, minister of agriculture, forestry and fisheries (44), who are considered the two frontrunners. Takaichi, the former minister in charge of economic security, is a far-right politician. Koizumi, the minister of agriculture, forestry and fisheries, is drawing attention as the youngest-ever candidate.

Under Japan's cabinet system, the leader of the majority party usually becomes prime minister, and the current largest party is the Liberal Democratic Party. If a new party president is elected on the 4th of next month, the parliament is scheduled to choose the next prime minister toward the end of the month. With Shigeru Ishiba, who has a relatively moderate view of history, stepping down, there are expectations that if a more conservative prime minister emerges, uncertainty in Korea-Japan relations may increase.

The Liberal Democratic Party's candidate registration for the leadership election on the day was completed by five people: Sanae Takaichi and Shinjiro Koizumi, as well as Chief Cabinet Secretary Yoshimasa Hayashi (64), Takayuki Kobayashi, former minister in charge of economic security (50), and Toshimitsu Motegi, former Liberal Democratic Party secretary-general (69). All ran in last year's leadership election and have come out again.

Asahi Shimbun's nationwide opinion poll conducted on the 20th–21st showed that 28% of respondents chose Takaichi as the person most suitable to be the new party president. Koizumi followed with 24%. In a Mainichi Shimbun poll conducted the same day, Takaichi was first (25%) and Koizumi second (21%).

However, within the Liberal Democratic Party's support base, Koizumi led. In the Asahi poll, 41% of LDP supporters backed Koizumi; Takaichi received just 24%. In the Mainichi poll among LDP supporters, Koizumi was first (40%) and Takaichi second (22%).

Nationwide polls suggest that supporters of opposition parties with strong conservative leanings back Takaichi, whereas LDP supporters back Koizumi, who is relatively less conservative. This was a factor in last year's leadership election, when Takaichi topped the first-round vote and advanced to the runoff but was defeated by then-candidate Ishiba.

This LDP leadership election is competed over a total of 590 votes, consisting of 295 votes from LDP Diet members and 295 votes from party members and supporters (about 910,000 votes converted into 295 votes for calculation). If no candidate gains a majority in the first round, a runoff vote is held. At present, a runoff is likely. Because the runoff is decided by 295 Diet member votes and 47 votes from 47 prefectural governments, Diet members' votes are expected to decide the outcome.

It is observed that the preferences of Diet members could be influenced by former prime ministers such as Taro Aso and Fumio Kishida. About 40 members each belong to the 'Aso faction,' the only faction within the party led by former Prime Minister Aso, and to the group that followed Kishida when he led the former 'Kishida faction,' meaning some 25–30% of all Diet members are under the influence of the two. This means the two former prime ministers could be 'kingmakers.'

Aso and Kishida have not yet stated support for any particular candidate. The Yomiuri Shimbun said, "Which candidate Aso and Kishida support in the runoff could be a major variable in selecting the new party president," adding, "They are likely to make a final decision while watching each candidate's policies and the situation."

The market expects that if Takaichi is elected, the yen will weaken and stock prices will rise. This is because she is judged to be the most aggressive among the candidates on 'monetary easing' and 'fiscal expansion.' The opposite is expected if Koizumi is elected. Because he supports the Bank of Japan raising its key policy rate and fiscal consolidation by the government, the yen's value is expected to rise and stock prices to fall.

Tokyo=Il-gyu Kim correspondent black0419@hankyung.com