Shinzo Abe wins supermajority in Japanese election

Incumbent Japanese prime minister Shinzo Abe won a parliamentary supermajority in the upper house elections on Sunday.

Along with Abe’s Liberal Democratic (LD) party and its allies, it gained a two third majority. LD and its allies won 77 out of 78 seats needed for a supermajority in the 121 seats which were contested in the upper house.

In total, LD won 56, its Komeito party coalition partner won 14 and four independents won seats but they support Abe’s proposal for constitution reform.

Abe’s victory gives him an opportunity to reform Japan’s constitution to loosen restrictions over military activities in a national referendum. Abe is unlikely to scrap Article 9 that renounces war but could create a precedent for constitutional reform.

Including independents, there are 165 out of 242 members in the upper house who support constitutional reform. In the lower house, which is more powerful, Abe already has a two third majority. A referendum would need to be held after the Diet (national parliament) makes any constitutional decision.

This was the first election after the voting age was lowered to 18 from 21. Turnout was 54.7%, the fourth lowest since the second world war.

Abe focused his campaign on economics and implementing Abenomics - his economic reform program to awaken Japan's’ economy out of decades of stagnation. He launched the three-fold Abenomics plan in 2012 to increase government spending, create massive monetary stimulus and significant economic reform.

Abe said on Sunday: “We have to accelerate Abenomics to meet the public’s expectations.”

On Monday he ordered a round of fiscal stimulus spending due to weak demand in the corporate sector. Japanese stocks jumped about 4% and the yen weakened.

"We are going to make bold investment into seeds of future growth," Abe said on Monday.

"We have promised through this election campaign that we will sell the world the agricultural products and tourism resources each region is proud of."

He said he wanted to strengthen agricultural exports and improve infrastructure to welcome tourists. He also said that he wanted to take advantage of the Bank of Japan's zero interest rate and issue policy bonds for public private partnerships.

Michael Hewson, chief market analyst at CMC Markets, said: “A decent US payrolls number on Friday followed by a victory by Japanese prime minister Shinzo Abe in the Japanese Upper House elections at the weekend has helped push Asia markets higher this morning with the Nikkei 225 posting its highest levels since 24 June on speculation that an improved mandate will prompt the Japanese government to finally implement the long awaited third arrow of Abenomics.

“Whether this takes the form of further stimulus as well as structural reform is open to question at the moment but the hope is that Shinzo Abe’s improved mandate will make him bolder in terms of policy steps to turn the Japanese economy around. As a result the yen has weakened sharply, the worst performer on the day."