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August 22, 2009

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Japan's conservatives may lose grip on power

JAPAN'S opposition Democratic Party may score a runaway victory in the August 30 general election, seizing power from Prime Minister Taro Aso's conservative party, which has ruled for most of the past 54 years, newspapers reported yesterday.

The Democrats could win more than 300 of the 480 seats in parliament's lower house, although the number could change because about 20 percent of voters had not yet decided how they would vote, the Yomiuri and Nikkei newspapers said, based on telephone surveys.

Aso's Liberal Democratic Party, struggling with voter frustrations over scandals and long-term uncertainties about the economy and social security, is likely to see its strength more than halved to below 150 seats, the Nikkei said.

A solid victory for the opposition Democrats would end a policy deadlock in parliament, where the party and its allies already control the less powerful upper chamber and can delay legislation.

"The best thing for the market would be a very clear result, with the Democrats winning strongly," said Kenichi Hirano, operating officer at Tachibana Securities.

"If it turns into a messy situation where they don't get a majority and have to rely on other parties for a coalition, it won't be that good for the market."

Some said, however, that a landslide win for the Democrats could be negative for financial markets.

"They (the Democrats) want everything to be equal for everybody. This is not something a capitalist market can like," said Masayoshi Okamoto, head of dealing at Jujiya Securities. "They say they're trying to be realistic but if they win that many seats they'll basically have a free hand with policies."

The Democrats have pledged to revive the economy by putting more money in the hands of consumers.


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