Yujiro Goto, Research Analyst at Nomura, points out that Japanese Prime Minister Abe’s popularity rating remained at a high level in March, according to a Nikkei opinion poll (24-26 March).
Key Quotes
“The popularity rating inched up to 62% from 60% in the previous month. According to Nikkei poll, 74% said they are not satisfied with the government’s explanation of its land sale at a discount price to a private school, Moritomo Gakuen. Recent opinion polls conducted by other media also showed 3-10 percentage point (pp) decline in his popularity rating. Nonetheless, the popularity rating of Abe’s administration remain at healthy levels, with most above 50% at various opinion polls, and the impact from the land sale issue on popularity seems to have been limited so far.”
“Ruling collation also remains popular. The LDP’s popularity rating stayed at 45%, just 1pp lower than the previous poll. In contrast, the popularity of the biggest opposition party, DP, is low at 8%. The land sale issue has not improved popularity of opposition parties and the gap in popularity ratings between the LDP and DP remains large. The political situation in Japan remains relatively stable, while developments in the land sale issue are worth monitoring.”
“As opinion polls still show Abe’s cabinet has strong popularity, there is a risk of PM Abe calling a snap election. We currently assign the highest probability to the election being held next year, but an earlier election cannot be ruled out.”
“Japan’s stable political situation can invite safe-haven flows ahead of the French election, while monetary policy divergence will limit the downside risks of yen crosses. BOJ Governor Kuroda repeated on Friday that the BOJ will not be forced to raise rates by overseas rate hikes and he sees no near-term problem with JGB purchases. He said the yield curve control is designed to be highly sustainable, while there is no situation that would require the BOJ to hike rates in the near future. Declining foreign yields have been exerting downside pressures on yen crosses at the moment, while monetary policy divergence will be clearer going forward, supporting yen crosses gradually.”
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