Mandate ... Japanese Prime Minister Shinzo Abe. Credit:AFP The yen was trading at 100.46 per dollar, up 0.2 per cent from before the election. Stock market The Topix Index of stocks has climbed 59 per cent in the past eight months on optimism that Abe’s three-pronged economic strategy of monetary stimulus, a flexible fiscal stance and business deregulation will end two decades of malaise. The yen has tumbled about 19 per cent against the dollar in that time, offering exporters a more competitive exchange rate. Abe has already seen how quickly investor sentiment can turn. When he delivered a speech previewing his structural reform agenda that omitted details and showed no legislation would be planned for months, the Topix tumbled 3.2 per cent.

Decisions loom on whether to cut the corporate tax burden; reduce labour regulations dating from the 1960s that offered lifetime employment at larger enterprises; make it easier to consolidate agricultural land; allow greater access to foreign goods and services through the Trans Pacific Partnership trade talks; streamline the approval of medical-industry products; restart nuclear reactors to cut energy costs; and address funding shortfalls in the social-security system. Sales tax Abe must also decide whether to proceed with a scheduled increase in sales taxes designed to pare the fiscal deficit in a nation with the world’s largest public debt burden. The prime minister yesterday said that question will be answered around the autumn, with economic data helping determine the call. Turnout tumbled in the election, which coincided with the first weekend of school holidays. Kyodo News estimated the share of voters casting ballots at 52.26 per cent, down from 57.92 per cent in 2010, and reported that the final figure could be the lowest since 1998. ‘‘It’s not like there’s a groundswell of enthusiasm for him,’’ said Koichi Nakano, professor of politics at Sophia University in Tokyo, in reference to Abe. ‘‘If he misreads that and gets complacent, he could be punished very quickly in cabinet support levels.’’

Half of the upper house seats were up for election yesterday. The LDP is set to win at least 64 seats which, added to its existing 50, will make 114, according to NHK. New Komeito is projected to win at least 10 seats, making a total of a minimum 19, the broadcaster estimated late last night. Limited opposition The DPJ will win at least 15 seats, for a total of about 57, NHK calculated. The Japan Restoration Party, once seen as an up-and-coming force, was limited to seven seats, adding to its single existing upper house seat, NHK said. ‘‘This is a powerful message telling me to proceed with my economic policies,’’ Abe said on NHK after polls closed. ‘‘I want to make sure people feel the effects of the economic recovery as soon as possible.’’ Another choice for Abe is how great a focus to place on strengthening defence and revamping the US-occupation era constitution. With China increasingly challenging Japan’s administration of the Senkaku Islands, known as Diaoyu in Chinese, the LDP has proposed buying first-strike weapons such as cruise missiles. The party also has proposed amending the constitution to open the way to restoring the right to wage war.

National security Abe said yesterday on NHK that he wanted to deepen the debate on constitutional change in a calm and stable atmosphere. He said Japan’s door was open to talks with China and declined to say whether he would visit Yasukuni Shrine, which is dedicated to Japan’s war dead including leaders convicted as Class A war criminals by an Allied tribunal after World War II. In Fukushima City, capital of the prefecture devastated by the March 2011 tsunami and ensuing nuclear reactor meltdowns, voters showed interest in both economics and national security. ‘‘My expectations are for foreign policy,’’ said Masahiko Kanno, 67, who said yesterday he voted for the LDP. ‘‘We should take a firm stance toward China and South Korea on territorial problems, history and so on,’’ he said. Japan is also enmeshed in a dispute with South Korea over the administration of the Dokdo Islands, known as Takeshima in Japan. Tomoko Kida, a 27-year-old company employee on maternity leave, said her focus in voting for the LDP was on the economy. ‘‘Share prices are rising, but no one around me is feeling the benefit. I want him to introduce some policies that raise wages.’’

Wage malaise Wages haven’t risen in Japan on a sustained basis since the bursting of the asset bubble in the early 1990s, as companies focused on fixing balance sheets and consumers reined in their spending. Labor cash earnings fell 0.1 per cent in May from a year before. Angst over incomes may deepen should Abenomics deliver on its promise of inflation, without prompting companies to start increasing compensation. Among the burdens reducing the incentive for Japanese companies to invest at home is the second-highest level of effective corporate taxes in the Group of Seven nations, executives say. The nation’s 35.6 per cent corporate tax rate compares with 25 per cent in China and 17 per cent in Singapore, according to the Ministry of Finance. Only the US has a higher rate at 39.1 per cent, according to Organization for Economic Cooperation and Development data. Corporate tax

‘‘We want corporate taxes in line with other nations,’’ Hiroshi Tomono, chairman of the Japan Iron and Steel Federation and president of Nippon Steel & Sumitomo Metal, said at a gathering of industry leaders last week in Karuizawa, northwest of Tokyo. Abe, who took office as prime minister for the second time in December after leading the LDP to victory in lower house elections, has already overseen a recalibration of the nation’s monetary policy. He installed inflation-target advocate Haruhiko Kuroda in March. Kuroda followed through with an unprecedented plan to double the monetary base over two years. Consumer prices excluding fresh food are forecast to rise 0.3 per cent in June from a year before, the first increase in 14 months, based on the median estimate of economists surveyed by Bloomberg news before a July 26 report. Meantime, slowing growth risks stoking dissent among LDP lawmakers just as Abe embarks on his reform legislation. Gross domestic product rose an annualized 2.8 per cent in the three months through June, compared with 4.1 per cent in the first quarter, a survey of 29 economists by Bloomberg indicates. ‘‘Abe has a window of opportunity to undertake real reforms’’ if he’s willing to use his political capital, said Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo. ‘‘Members within Abe’s LDP with vested interests will be against reforms -- especially on health care, pensions and agriculture.’’