Japan Prepares for Decisive Leadership Vote Tomorrow

Japan’s ruling Liberal Democratic Party (LDP) votes for a new leader on Wednesday, who will almost certainly become the country’s 100th prime minister, after current premier Yoshihide Suga announced he would not seek a second term as party leader.

The race among Fumio Kishida, Sanae Takaichi, Taro Kono and Seiko Noda has introduced a rare dose of uncertainty into Japanese politics after Shinzo Abe’s nearly eight-year tenure that made him the country’s longest-serving premier. That uncertainty has been partly down to the party’s powerful factions not lining up behind one contender. According to polling by the national broadcaster NHK and other media outlets, Kono and Kishida are seen as the top two candidates ahead of the vote followed by Takaichi and Noda.

Although the public doesn’t get a say in the party’s election per say, voters will make their voices heard in a national election that must be held by the end of November. Once the LDP makes its decision parliament is set to have an extraordinary session on Oct. 4 where the LDP will use its powerful majority in the Diet, or lower house, to elect its leader as the next prime minister. The terms of the current members of the Diet run until Oct. 21, meaning a general election will be held this year as snap elections must be held within 40 days of the premier dissolving the Diet. Local media have reported, quoting LDP executives, that the lower chamber will likely be dissolved in mid-October, with the election slated for either Nov. 7 or Nov. 14. In Japan, elections are traditionally held on a Sunday.

The Polls Suggest

A poll from the Asahi newspaper published Sunday night found about 110 of the LDP’s 382 lawmakers said they would support Kishida, with 110 for Kono and 80 for Takaichi, while Noda lagged on 20. A separate poll by Kyodo News of party members and supporters conducted Sept. 25-26 found 47% favored Kono as leader, compared with 22% for Kishida, 16.2% for Takaichi and 3% for Noda.

How the Vote is Going to Work

Voting among rank-and-file members of the LDP concludes tonight, and lawmakers will then vote in person Wednesday — with the two groups each having 382 votes. If a candidate does not win a majority of the 764 votes, there will be a runoff between the top two vote-getters, in which almost all the votes are allocated to lawmakers — 430 votes divided between the 383 LDP Diet members again and one vote for each of the 47 prefectures. Lawmaker voting begins at 1 p.m. local time (+9 GMT), with the initial tally to be announced about 2:20 p.m. Runoff voting, if required, would follow immediately with the results of that round expected about 3:40 p.m.

Faction Watch

Kishida has his own 46-member faction and can count on it voting as a bloc for him. The biggest faction, which includes former Prime Minister Shinzo Abe, is allowing its nearly 100 members to vote for the candidate of their choice, while Abe has thrown his support behind Takaichi. Kono is a member of the Aso faction, which is set to offer major backing. The Ishiba faction, with 17 members, and the Ishihara faction with 10, are leaning to Kono.

Market Pulse: Ahead of tomorrow’s vote, traders are in favor of Kono’s candidacy, though the market has tightened over the last week with Kishida leading during a three-day stretch. His contract closed yesterday at 62¢ and Kishida second at 45¢.

Third place belongs to Takaichi, though, her contract is some ways away from the two leaders at 5¢. The fourth candidate in the race, Noda Seiko, hasn’t figured in trader’s thinking for much of the life of the market as her contract has closed each trading day at 1¢ for 19 of the 25 available days.

Tight Election Narrative Persists in Virginia’s Gubernatorial with Latest Poll and Rating Change

A new poll from Monmouth University from Sept. 22-26, shows former Virginia Democratic Gov. Terry McAuliffe holding a slim lead over Republican Glenn Youngkin with early voting already underway ahead of the Nov. 2 vote.

In the poll, 48% of registered voters said they’d support McAuliffe, and 43% said they’d back Youngkin. That is virtually unchanged from the university’s August poll, which had McAuliffe up, 47%to 42%, among registered voters. The poll had a 3.5 percentage point margin of error.

Last week, the Cook Political Report shifted from leaning toward the Democratic Party to being a “toss-up.” McAuliffe and Youngkin are set to take part in the second and final Virginia gubernatorial debate on Tuesday.

Digging a little deeper into the poll and we find that McAuliffe’s most significant base of support remains in Northern Virginia, where he was up 58% to 29% over Youngkin. He did make further inroads into the eastern Tidewater region as he stretched his lead 13 points to 56% to 34% from last month. Youngkin has held on to his large lead (24 points) in the western part of the state, but saw considerable growth in the central part of the state, which encompasses the I-95 corridor. The Republican flipped McAuliffe’s August advantage of 10 points to an 11-point lead for himself in the September survey.

Four years ago, incumbent Gov. Ralph Northam won NoVa by 35 points (67% to 32%), the Tidewater area by 13 points (56% to 43%) and the central region by 9 points (54% to 45%), while losing western Virginia by 23 points (38% to 61%).

Why Virginia Matters Ahead of 2022?

Over the last decade, the outcome in the Virginia House of Delegates races as a whole has correlated well with what occurred in the US House of Representative races the following year. Democrats’ popular vote margin in the House of Delegates in 2017 was nearly the same as it was in House races nationwide in 2018, for example. And since 1978, the party that has won the Virginia governor race has gone on to gain seats in the House of Representatives the following year 8 of 11 times.

One of the few times Virginia’s gubernatorial race has failed to predict the following year’s results was notably in 2013 when McAuliffe won that race (Virginia governors cannot serve two consecutive terms). That race also showed how far the state has moved to the left. Republicans haven't won a key statewide race in Virginia since 2009.

Market Pulse: Since we took a deeper look at the 2021 Virginia gubernatorial election market last Tuesday, we’ve some not insignificant movement considering the past 90-day trend. Traders remain very much behind former Virginia Gov. Terry McAuliffe (D) at 76¢ — down 4¢ in the past seven days. Meanwhile, Youngkin’s contract was up just 2¢ overall to 24¢. The Republican’s odds did hit 27¢ on Sept. 25, which was a penny under the 90-day high from Aug. 25. McAuliffe’s contract is a penny higher than the 90-day low.

In the two other Virginia markets of note, traders are exactly where they were last week in the House of Delegates market as they predict Democrats to win “50 to 51” seats at 35¢. The crowd is also leaning slightly toward Democrats losing their majority with “48 or 49” seats won trading in second place at 20¢. That is marginally ahead of third and fourth place contracts that predict Democrats winning “52 or 53” or “54 or 55” at 17¢. In the other market, which was launched just four days ago, traders have Youngkin edging McAuliffe in Virginia Beach by a margin of 61¢ to 40¢.

• Will any Republican vote by Oct. 22 to raise or suspend the debt limit?

With every news cycle the markets shift on PredictIt and so too can the odds. Here are five articles worth a read:

• Pelosi says Biden’s infrastructure bill can’t wait for social safety net bill — NBC News
• Five things to watch in the final Virginia governor’s debate — The Hill
• Japan’s ruling party race: the four candidates to replace Suga — Financial Times
• ‘Snakes, tentacles and dragons’: GOP boosts incumbents with new Texas congressional map — Politico
• Laschet drops state post as pressure grows over German vote loss — Bloomberg

We are always crowdsourcing new market ideas from traders. Send ideas to [email protected] and be sure to include a legitimate resolution source.

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Team @PredictIt

Featured section news and analysis sources include: Reuters (1 and 2), Bloomberg, The Hill (1 and 2), CNN Politics, Monmouth University Polling Institute (1 and 2) and Politico.