3 potential scenarios on the Japanese election - Barclays

Barclays’s Analysts outline three potential scenarios on the outcome of the Japanese snap election called on Oct 22nd.

Key Quotes:

 An easy and clear LDP victory no longer appears to be a dominant baseline scenario.

Opposition parties are re-aligning and gathering momentum

Putting at risk the ruling parties' majority

3 potential scenarios it sees:

• Strong LDP victory (ruling parties retain two-thirds majority)
• Weak LDP victory (ruling parties retain majority, but less than two-thirds)
• LDP defeat (ruling parties lose majority)

Each scenario would have different near and medium-term implications for JPY, JGBs and equities as the continuity of Abenomics and the risk of more extreme policies would come into focus