TOKYO (Reuters) – Japanese Finance Minister Yoshihiko Noda, a fiscal conservative, is financial markets' preferred choice among candidates to succeed unpopular Prime Minister Naoto Kan, but whoever takes over is unlikely to last more than a year in the job, a Reuters poll showed.
Kan, who took office in June 2010 as Japan's fifth premier in as many years, has signaled that he will step down once parliament enacts key legislation, including a bill to allow the government to borrow more to fund this year's budget.
Parliament is expected to pass the pending bills next week and a ruling Democratic Party of Japan leadership election could be held as early as August 28, unless renewed bickering with the opposition causes delays.
The next prime minister must balance the need to fix Japan's tattered finances while rebuilding from the triple disasters of the March earthquake and tsunami and the nuclear crisis that ensued.
But Kan and his four predecessors have all struggled to achieve much in the face of a divided parliament, where the opposition controls the upper house.
Forty-two percent of the 32 market participants surveyed by Reuters said Noda was their preferred candidate.
"Basically, Noda, who has raised the idea of a 'grand coalition' between the ruling and opposition parties is the most suitable," said Hideyuki Ishiguro, an investment strategist at Okasan Securities. "If a 'grand coalition is formed, Japan's ability to implement policies would be greatly improved."
ANOTHER REVOLVING DOOR LEADER?
The 54-year-old Noda, who wants to rein in a public debt already twice the size of the $5 trillion economy, has said he favors tax hikes to help pay for rebuilding from the massive March tsunami that devastated the country's northeast -- Japan's biggest reconstruction project since right after World War Two.
He is also an advocate of a government plan to double the 5 percent sales tax by the middle of the decade to help fund the rising social security costs of Japan's fast-aging society.
Ex-transport minister Sumio Mabuchi, who has said his top priority would be pulling Japan's economy out of deflation and is opposed to near-term tax hikes, was a distant second with 15 percent.
But even though Noda tops the list, many market players think tax hikes should wait if the economy is weak.
More than one-third of respondents said the next premier's top priority should be ensuring that the economy does not fall back into recession, including additional stimulus steps if needed and postponing tax hikes to pay for rebuilding.
Twenty-seven percent said the next leader should focus on deregulation and other steps such as free trade deals to promote economic growth, while an almost equal percentage said restraining debt should be the No.1 goal.
Other likely candidates, including former environment minister Sakihito Ozawa and Mabuchi, are opposed to early tax hikes for reconstruction. The two topped the lists of possible successors seen as most likely to cause Japanese government bond yields to rise on concerns about ballooning debt. No respondent said Noda's election would cause such worries.
A whopping 75 percent of respondents, however, expect the next leader to last at most until the next scheduled leadership race in September 2012, with just two forecasting a four-year term.
Almost half of participants said they wanted Japan's next leader to be decisive and able to push through policies in the face of opposition, while 27 percent said an ability to get along with ruling party and opposition rivals was most important.
(Additional reporting by Natalia Konstantinovskaya; Editing by Tomasz Janowski and Joseph Radford)
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