Investors see Japan’s new leader, Fumio Kishida, as a steady consensus-builder who can lead the ruling Liberal Democratic Party and its coalition partner to victory in a general election due in November. But while the elimination of some political uncertainties is seen as benefiting Japanese stock prices in the near term, investors are not sure if he can push ahead with the tough measures seen as necessary to boost economic health. Kishida, 64, won a ruling party leadership vote here on Wednesday and is due to become prime minister next week. He inherits an economy that is picking up steam thanks to falling coronavirus cases, increasing vaccinations and an improving earnings outlook, all of which should support Japanese stocks. Japanese shares have risen 1.6% this month, outperforming a fall of more than 3% in the United States and Europe. Investors agree Kishida is more predictable than his rivals for the top job, such as vaccine minister Taro Kono, with his anti-nuclear streak, and Sanae Takaichi, a diplomatic hawk and a social conservative. “Kishida can been seen as a safe pair of hands, particularly on the diplomatic front,” said George Boubouras, head of research at K2 Asset Management in Melbourne. “His long tenure as foreign affairs minister under Abe is an obvious good, positive market signal.”. Kishida held key posts under former Prime Minister Shinzo Abe and had been seen as an heir to Japan’s longest-serving prime minister, who retains a lot of influence in the ruling party. But Kishida’s reserved style has also raised questions about whether he can push through reforms to boost competitiveness. “The pandemic laid bare how old-fashioned Japan’s bureaucracy is. Japan is also falling behind on environment technologies. These are some of the issues the government needs to tackle,” said an investment manager at a major Japanese insurance firm. “Markets probably view the outcome as a decision by the LDP to avoid changes. If you put it nicely, Kishida represents stability. But if you put it badly, the ship will continue sinking slowly and that won’t change.” Abe’s promise almost a decade ago to carry out structural reforms, energised investors but many think he fell short when it came to delivering results. “If Kishida can project an inclination toward structural reform, that would likely be appreciated by offshore investors and result in flows into Japan’s stock market,” said Yunosuke Ikeda, chief equity strategist at Nomura Securities. In the near term, there are unlikely to be big policy initiatives as an election for the lower house must be held by Nov. 28. “Kishida will immediately have to deal with an election campaign. It will be hard to talk about any painful reforms before that,” said Shinichi Ichikawa, senior fellow at Pictet Asset Management. “I don’t think investors will build large positions ahead of the election without knowing what kind of policies will be implemented.” (Reporting by Hideyuki Sano and Tom Westbrook, additional reporting by Kevin Buckland in Tokyo Editing by Robert Birsel)