Reactions to Japan's PM Kishida stepping down

(Reuters) -Japanese Prime Minister Fumio Kishida said he will step down in September, ending a three-year term marred by political scandals and paving the way for a new premier to address the impact of rising prices.

Kishida's decision to quit triggers a contest to replace him as president of the ruling Liberal Democratic Party (LDP), and by extension as the leader of the world's fourth-biggest economy.

Here are some reactions to the news from market and political analysts:

KOICHI NAKANO, POLITICAL SCIENCE PROFESSOR, SOPHIA UNIVERSITY, TOKYO

"I was expecting Kishida not to be able to run for quite some time. And that's to do with basically the statistics. He's already passed average tenure of an LDP prime minister by serving three years. And he's not anywhere near a position to be able to say, ‘I'm special, I need more time.’ So he was running against the odds to begin with.

"And at the end of the day, an LDP incumbent prime minister cannot run in the (party) presidential race unless he's assured of a victory. It's like the grand champion yokozunas of sumo. You don't just win, but you need to win with grace. And so if you can't do that, you're supposed to retire. It's considered to be unseemly for the president to run and to get defeated as an incumbent.

RINTARO NISHIMURA, ASSOCIATE OF THE ASIA GROUP, A WASHINGTON-BASED STRATEGIC ADVISORY FIRM, TOKYO

"It’s open field for the next president. Kishida's endorsement will matter as well. Will he back someone from his own faction, like Hayashi or Kamikawa, or ride the wave with another candidate, such as Ishiba, Kono, Koizumi. The new leader needs to be a fresh face, whether that means young or not associated with Kishida, and reform-minded, showing voters that the party will change.

"The new leader will have a tough job navigating this tough political environment and heading into a general election knowing the poll numbers are not looking good. An election is likely to be right after the new PM is sworn in, as new PMs tend to have a slight boost in poll numbers. It’s better to call before negatives come up."

MIKITAKA MASUYAMA, PROFESSOR AT THE NATIONAL GRADUATE INSTITUTE FOR POLICY STUDIES

"Support for the prime minister has been sluggish of late and the voices calling for his stepping down have been loud. The leader of the Liberal Democratic Party is tantamount to prime minister. Anyone in the position should be able to bring the party together and manage the government. Someone with experience is better than those who are just popular in voter polls.

"If Kishida picked (Foreign Minister Yoko) Kamikawa, and others in the LDP joined him, she could be the one."

SHOKI OMORI, CHIEF JAPAN DESK STRATEGIST, MIZUHO SECURITIES, TOKYO

"Political uncertainty isn’t good at all, with Mr. Kishida not even raising his hand for election. The market implication is that Japanese politics is going to be foggy, and whoever the LDP premier will be, the cabinet choice is going to be very unclear and thus the policy path is going to be a mystery. In short, risk-assets, particularly equities, will likely be hit the most, given foreign investors’ attention and big inflow/outflow in the markets.

"Market participants are going to dislike the uncertain situation, especially those investing in risk assets, such as equities. PM Kishida pushed for New NISA (investment accounts) and now he’s pulling back. Yen is going to depend on external factors especially U.S. data and the Fed. JGBs will still remain a supply/demand market. My initial view is that equities are going to be hit the most."

CHARU CHANANA, HEAD OF CURRENCY STRATEGY, SAXO, SINGAPORE

"While Kishida’s stepping down could bring some uncertainty, his low approval ratings mean a significant negative reaction from equities may be avoided."

MICHAEL CUCEK, PROFESSOR SPECIALISING IN JAPANESE POLITICS, TEMPLE UNIVERSITY, TOKYO

"He’s been a dead man walking for quite some time. That there was no way to add up the numbers so that he would get reelected was clear for a long time. Public discontent with Kishida was connected with the LDP’s entanglements with the former Unification Church, which became apparent after Abe’s assassination, as well as slush fund scandals, and the slide in the yen that increased inflation pressures."

TAKAHIDE KIUCHI, NOMURA RESEARCH INSTITUTE EXECUTIVE, TOKYO

"The Kishida administration at first raised market concerns by leaning to (re)distribution measures, but it later pivoted to expansionary policies such as the 'asset income doubling plan', which was well received by the markets. However, the administration has recently launched policies with unclear objectives such as tax cuts, giving an inconsistent impression on its policy focuses."

KENTA IZUMI, LEADER OF THE BIGGEST OPPOSITION CONSTITUTIONAL DEMOCRATIC PARTY (POST ON X), TOKYO

"The issues of the former Unification Church, political money and inflation countermeasures have been headache for him, but these problems are still unsolved."

RAHM EMANUEL, US AMBASSADOR TO JAPAN(POST ON X), TOKYO

"Under Prime Minister Kishida’s steadfast leadership, Japan and the United States have ushered in a new era of relations for the Alliance."

(Reporting by Rocky Swift, Kevin Buckland, Kiyoshi Takenaka, Kantaro Komiya and Brigid Riley; Compiled by Ankur Banerjee; Editing by Kim Coghill and Raju Gopalakrishnan)