Somerville says that while the result was not in question, the 64 per cent DPJ majority was a surprise. He also says that the country’s economic malaise and the global recession may have cut voters patience short while the high turnout suggest that young people favoured change.
He says: “The DPJ campaigned to boost incomes and strengthen Japan’s social safety net. Its stated policies revolve around redistributing money away from Japan’s huge bureaucracy towards general population. Generous child allowances, the removal of tolls from motor ways and a hike in the minimum wage have all been promised.
“These policies should encourage consumer spending and particularly benefit specialist retailers, truckers and providers of health and education services. However, concern remains that cost cutting in the bureaucracy may not be sufficient to fund these policies and public debt may be further inflated, pushing long-term interest rates higher.”
Somerville says there will be five key winners in the new regime, namely smaller companies, households, the young, politicians and urban areas.
He says the landslide victory has not been reflected in the stock market, despite a sharp rise on Monday.
He says: “Until there is more clarification of the makeup of the new Cabinet and their immediate policy goals, scepticism is likely to remain over the ability of the DPJ to enact the changes they have promised. However, they have been given a tremendous boost with the scale of their victory. Together with the fact that they already control the Upper House, this should give them the ability to force through the much needed revitalisation policies that Japan and investors require.”