Will Abe actually resign? - Nomura

Analysts at Nomura suggested that Abe’s early resignation seen as unlikely 46% of bond investors expect the approval rating of the Abe cabinet to remain almost unchanged after the expected cabinet reshuffle this week, according to the survey conducted by Nikkei QUICK. 

Key Quotes:

"More bond investors (31%) expect the rating to rise than decline (23%). 

Although slightly more bond investors see a positive impact, expectations are relatively muted, as nearly 50% of investors expect almost no change in the approval rating after the reshuffle. At the same time, only 6% of bond investors expect Prime Minister Abe to resign before year-end.

Another 19% expect him to resign before his second term ends in September next year, but a resignation is still viewed as a risk scenario. We also judge an early resignation to be unlikely. 

Concerns over Japanese political uncertainty have been putting downside pressure on Japanese equity prices and yen-crosses, but we do not expect the uncertainty to have a sustained negative impact on yen-crosses. In the event of a change of Prime Minister, 75% think Abenomics would be just partially changed, while 16% of bond investors would expect Abenomics to be maintained (15%), or even strengthened (1%). 8% see a risk of full-scale changes in Abenomics.

31% see Mr Ishiba, ex-Defence Minister, as the most likely successor of Mr Abe, while 29% see Foreign Minister Kishida as the most likely successor. Finance Minister Aso is also viewed as a possible candidate (22%). An opinion poll conducted by Sankei showed Mr Ishiba is also viewed as the most appropriate person to be Prime Minister."