TMR

IN JAPAN’S freezing north, Kuniko and Kazutaka Kon trudged through deep snow and howling winds to attend a rally for a new party that aims to derail Prime Minister Sanae Takaichi’s early election gamble.

About 250 mostly silver-haired voters crammed inside the auditorium of a community center in Akita, near the northern tip of Japan’s main island, to hear the plans and policies of the Centrist Reform Alliance.

The Kons say they’ve been unsettled by Takaichi’s remarks that Japan could deploy its military if China tried to seize Taiwan. The couple fear the premier is taking Japan too far to the right.

“We have to deliver a big ‘no’ to the Takaichi administration,” Kazutaka Kon, 79, said.

There are millions like the Kons across the nation whose votes could prove decisive in Japan’s 46 most tightly-contested seats. Those results will shape whether Takaichi secures a commanding win, barely scrapes through, or — an outcome the CRA has hoped for — loses control of the lower house. The nation’s verdict will also have major implications for markets.

Just three months into the job, Takaichi is banking on her strong approval ratings, more assertive stance on defense and promises of a sales tax cut and higher spending to add to the ruling coalition’s 233 seats in the 465-member House of Representatives, the parliament’s lower and more powerful chamber. She has indicated she will step down if that majority fails to grow, an outcome that would draw comparisons with the brief tenure of former UK Prime Minister Liz Truss.

Opinion polls suggest Takaichi’s Liberal Democratic Party will win comfortably, but the loss of a key election ally and the formation of the CRA less than a month ago are injecting uncertainty into the result.

The Kons are longtime supporters of Komeito, a party established to clean up Japanese politics and offer support to the needy with the backing of Buddhist organization Soka Gakkai. For the past quarter century, Komeito has repeatedly helped the LDP win elections through a mutual back-scratching deal tailored to Japan’s dual voting system.

People like the Kons would vote for the LDP candidate in their local constituency, knowing that in return, LDP voters would back their Komeito candidate in the corresponding proportional representation vote. The Kons voted for the LDP even after news emerged in 2023 that some of the party’s lawmakers had siphoned off undeclared fund-raising money.

“The money scandal was the worst,” said Kuniko Kon, 75. “I wish those lawmakers would just step down. I hated that people saw Komeito in the same way.”

That voting arrangement has now been turned on its head after Komeito bolted from the ruling party coalition in October. Komeito then merged with the largest opposition party, the Constitutional Democratic Party, in January, to form CRA. The new arrangement essentially means former CDP members will run in the constituencies as CRA candidates, while former Komeito members will run as CRA candidates in the PR vote.

The upper range of local media reports puts the average size of Komeito supporters in constituencies around the nation at around 20,000, a figure that is larger than the LDP’s winning margins in those 46 vulnerable seats.

The Kons will vote in Akita Constituency No. 1 where the LDP’s Hiroyuki Togashi won by just 872 votes in 2024. For the CRA, capturing Akita No. 1 would be a critical victory that demonstrates its ability to leverage Komeito support and expand its footprint as it tries to slow Takaichi’s rightward push.

Akita is known for its winter snow, hot springs and its delicious sake made from rice harvested in the region. But its scenic vistas belie its severe demographic crisis, with farmers aging and a lack of major economic opportunities sending young people to the big cities like Tokyo. Akita ranks the near bottom in national household incomes, making the pain of inflation acute.

Residents here also feel their peace threatened every time North Korea fires missiles toward the Sea of Japan. Before the winter, their sense of insecurity was fueled by a spate of attacks by marauding bears.

On stage at the community center, CRA candidate Shusaku Hayakawa, a 49-year-old Akita native, said he would revive the local economy by drawing on his past experience as a secretary to former Prime Minister Tsutomu Hata and as an entrepreneur.

“Akita is No. 1 on a list of disappearing cities — isn’t that sad? Shouldn’t we try to stop that?” Hayakawa said. “Politics isn’t necessary for strong regions or the powerful. Politics is necessary for the weak and the vulnerable.” 

While the CRA looks to build momentum in Akita, Takaichi is also making progress in pulling back voters who strayed from the LDP at the last two elections with her more assertive policy stance.

Among LDP voters who have doubted the party is 55-year-old Shinichi Okamoto. Before Takaichi took the helm, Okamoto felt the LDP was drifting away from the conservative values embodied by the late Prime Minister Shinzo Abe, whose 2022 state funeral he attended in Tokyo. That’s why he left his ballot blank in the last election.

“It’s really important for the nation’s leader to lift up the people. And that’s exactly what Takaichi has done so well,” he said, after braving freezing snow and gusting winds to attend a rally for the LDP incumbent Togashi. “Some people say multiparty politics is better, but I believe we need a strong leader.”  

Complicating the battle in Akita, and across the nation, is the emergence of a host of smaller parties with well-honed agendas that zoom in more closely on voter concerns about take-home pay, the cost of living and the growing presence of foreigners in the nation.

Opinion surveys show that the nationalist Sanseito and the center-right Democratic Party for the People will likely solidify their presence in parliament, further complicating the election picture. 

Last week, as hail turned to snow, Sanseito candidate Miwako Sato delivered an outdoor speech near Akita Station. 

“They say we need immigrants to compensate for labor shortages caused by the declining birthrate. That’s utter nonsense. They just want cheap labor,” Sato said via megaphones placed atop an election van. “If things continue like this, Japan will cease to be Japan.” 

Some drivers waved their support as they passed. Sato won 13% of the vote — about 60,000 ballots — in last year’s upper-house election in a different voting district, contributing to an LDP candidate’s loss, an indication of Sanseito’s ability to shake up election results. The party won the second-largest number of votes in last year’s election, but that doesn’t always equate to victories in first-past-the-post seats. 

“It really comes down to Japanese First,” said Hidetsugu Mogami, who listened closely to Sato, standing on an icy sidewalk. “We should prioritize Japanese people more. Let’s spend money on Japanese people.”

Still, Mogami said he was torn between voting for Sanseito and the DPP. “The LDP is not an option,” he said.

Minutes later, DPP candidate Sachiko Kimura spoke at the same spot, joined by party heavyweight Motohisa Furukawa. 

Kimura, 39, was born and raised in Akita before becoming a lawyer and then a local lawmaker in the capital. A mother of two, she said she was returning to give something back to her hometown.

“The DPP has many young members, parents raising children, and female lawmakers,” she said. “Policies to raise take-home pay for working families and employees are moving forward. Let’s make progress here in Akita, too.”

For many in Akita, the LDP has drifted away from its core supporters and its conservative values for too long. A move by former LDP Agriculture Minister Shinjiro Koizumi to lower soaring rice prices last year appeared to focus on easing inflation pain in the cities, while ignoring the spiraling costs of farmers in the provinces.

That inflationary squeeze on small firms here continues to drive dissatisfaction.

Business has slowed since the year-end holidays at a seafood stall run by Hitoshi Kawamura and his father in Akita Citizens’ Market near the station.

“My fish aren’t selling, but the prices I pay keep going up,” Kawamura said as he sliced up cod. “After decades of LDP rule, if this is where we are, maybe it’s better they’re not in power.”

He favors eliminating the sales tax on food for good, as proposed by the CRA. But even though he attended the same school as the CRA candidate, he said he didn’t know much about the new alliance. 

While for some voters Koizumi is the poster child for where the LDP has gone wrong, others take a different view. About 800 people squeezed into a 500-seat auditorium as Koizumi, now the nation’s defense minister, took the stage amid a throng of raised smartphones. The son of a legendary former prime minister, Koizumi lent his support to Togashi, an indication of how much importance the LDP is placing on shoring up seats that Komeito helped them win previously.

“What we need is someone who keeps their feet on the ground,” Koizumi said. 

The overriding message of Togashi was to avoid complacency following the recent opinion polls. Predicted heavy snowfall in Japan’s first winter election in 36 years could be another wildcard. 

Poor weather would normally be seen helping the bigger parties with organized voting support. But with opinion polls pointing to an LDP victory, more snow may end up boosting the chances of smaller parties as more ardent voters cast their ballots while ruling-party supporters stay at home, assuming that victory is already in the bag.

“You won’t know the outcome of this election until the very last moment, until the final tally is revealed,” Togashi told supporters. “I am consciously and desperately asking for your help.” –BLOOMBERG

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TWO decades of chronic political instability have seen Thailand go from an aspiring economy on track to follow South Korea and Singapore into the ranks of rich nations, to a regional laggard beset by stagnant growth, soaring debt, widening inequality and a shrinking workforce. 

That’s the backdrop for this weekend’s election that pits a party campaigning on sweeping reform against two blocs pledging more populist policies. 

The People’s Party, successor to the Move Forward group that won the largest share of seats in the last election, says Thailand can reverse its decline only through deep political and economic reform. It’s pushing to rewrite the constitution, curb entrenched monopolies and dismantle an oligopolistic economy that it says stifles competition and innovation. 

Yet even if it wins the biggest share of seats in the 500-member lower house, the lack of a natural coalition partner makes its path to government tough in what’s essentially a three-cornered contest. Rivals Pheu Thai and Prime Minister Anutin Charnvirakul’s Bhumjaithai favor policies largely consistent with the past two decades: cash handouts and short-term stimulus. 

“If you had meaningful political reform — if you did have a stable pro-reform government in power — then it’s possible that over time they could try and fix some of the problems that Thailand faces,” said Gareth Leather, a senior economist at Capital Economics. “But until you get that political stability, it’s going to be very, very hard.”

Thailand’s economy is now only 5% larger than it was before the pandemic, equivalent to average annual growth of roughly 1%. By contrast, Vietnam and India are about 40% bigger than they were, according to Leather. 

Repeated military coups and short-lived civilian governments since the early 2000s have made long-term planning near impossible, with short-term fixes and populist spending prioritized. That’s left the country heavily reliant on exports and tourism — engines that powered past growth but are now sputtering — with no new industries ready to take their place. 

The People’s Party’s push to overhaul Thailand’s economic and political order has also put it — and its millions of young, urban supporters — on a collision course with Thailand’s powerful, entrenched business elites and the royalist-aligned conservative establishment. 

“We have a system that’s trying to pin down politics so that it doesn’t change, while politics of the younger generation, as is being symbolized by the People’s Party, wants change,” said Supavud Saicheua, chairman of the National Economic and Social Development Council, the state-planning agency. “The politics of representation is at odds with the politics of tradition.” 

Even if voters signal a desire for reform, the electoral math is daunting. Thailand hasn’t had a single-party government with an outright majority since the 2005 election. To govern alone, a party needs at least 251 seats in the 500-member lower house — a high bar under a system that dilutes the People’s Party urban-heavy support. Pheu Thai and Bhumjaithai, by contrast, draw votes more evenly in key regions, giving them a structural advantage, while their policies and ideologies make them more natural coalition partners.

The People’s Party, led by 38-year-old Natthaphong Ruengpanyawut, has argued that monopolies are a central driver of rising living costs and eroding competitiveness. It has made “fair-game competition” a cornerstone of its economic agenda, pledging to amend laws to level the playing field and grow the economy for everyone. One of the group’s founders, Thanathorn Juangroongruangkit, has described this election as a “wager on Thailand’s future and that of our children.”

“What we’ve seen in the past has been a coalition that’s sort of a marriage of convenience, without a real common vision or purpose,” former Prime Minister Abhisit Vejjajiva, who’s returning as Democrat Party leader this election, said in an interview. “Too often governments that have come and gone had just focused on short-term stimulus or projects that aren’t enough to really transform the economy.”

Abhisit’s Democrat Party — Thailand’s oldest political group — could become a potential player in the formation of any government. Abhisit, who led Thailand from December 2008 to August 2011, echoed some of the People’s Party’s concerns over monopolies, saying they reflect “the need to create a level playing field, more competitive environment, stimulating new industries.”

A group of academics, led by a former competition watchdog, published an open letter warning Thailand is approaching a “breaking point.” It urged voters to shun political parties hostile to long-term development, with dismantling monopolies among its core proposals.

The top 5% of companies control over 85% of the total revenue across the Thai economy, according to a report by the Organisation for Economic Co-operation & Development. Companies linked to some of the country’s richest men — including those of Sarath Ratanavadi, Charoen Sirivadhanabhakdi and Dhanin Chearavanont — hold outsized influence in energy, food and beverages, retail and telecommunications, and together account for nearly a fifth of the benchmark SET index.

Both Pheu Thai and Bhumjaithai’s policy platforms largely leave the status quo, elite-controlled economic structure intact, opting instead for short-term and consumption-driven measures. The ruling Bhumjaithai party had only been in power for three months when Anutin dissolved the parliament in December, and it promises to bring back another round of its popular consumption stimulus program, where the government subsidizes 50% of consumer purchases. It’s an initiative that began under the military-backed government of Prime Minister Prayuth Chan-Ocha to boost spending at the depth of the Covid pandemic, during which Anutin was a health minister.

Pheu Thai — founded by former Prime Minister Thaksin Shinawatra whose populist policies have helped retain his influence in Thai politics over the past two decades — is going even further, pitching a similar program where the government covers 70% of purchases. It’s also touting a daily national lottery that would give one-million-baht cash each to nine lucky winners, who could be farmers, seniors, community-health volunteers or taxpayers, and pitching to top up earnings for people who make less than 36,000 baht (about $1,100) annually, near the national poverty line.  

Yet the reality is that whoever wins government will inherit an economy with little fiscal or monetary room. Public debt stands near 66% of GDP, close to the government’s self-imposed 70% ceiling, and both Fitch Ratings and Moody’s Investors Service last year shifted Thailand’s outlook to negative. The Bank of Thailand’s policy interest rate of 1.25% is already among the world’s lowest, while high household debt and tight credit conditions limit the impact for further easing.

Thailand’s finance ministry sees gross domestic product growth slowing to 2% this year, while its central bank sees potential 1.5% growth, which would be the slowest pace outside of pandemic years since 2014.

All key political parties pledge to boost output gains to between 3%-5%, but economists are skeptical. Oxford Economics’ Jun Hao Ng sees a realistic growth ceiling at just 3%.

“The real issue is a lack of willingness to commit to reforms that may cause short-term pain but deliver long-term gains,” Ng said. “Fiscal stimulus and cash handouts are popular, yet they don’t address the fact that key growth engines — tourism, foreign investments, and goods exports — are facing a decline in competitiveness and are struggling to recover.”

Structural issues have already curbed investment inflows. Between 2015 and 2023, Thailand accumulated foreign direct investment worth 11% of annual GDP, compared with Malaysia’s 25% and Vietnam’s 42%, according to the OECD. Even Thai conglomerates and investors are increasingly looking abroad to seek higher gains. 

Thailand’s economic trajectory over the past two decades has been on a “disconcerting downward path,” according to a note by the Asean+3 Macroeconomic Research Office. Thailand may not reach high-income country status until 2050, missing its 2037 target, it warned, adding that only bold reforms have potential to accelerate that timeline. —BLOOMBERG

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BOTCOIN tumbled below $61,000, as the unwinding of leveraged bets and broader market turbulence deepened a selloff that has wiped out all of the gains since President Donald Trump’s election set off a speculative rush into cryptocurrencies. 

The token sank as much as 4.8% to $60,033 in early Asia trade Friday, extending a sharp selloff to plunge to its lowest since October 2024. The rout has erased half of Bitcoin’s value since it reached a record four months ago and has spread to other tokens, related ETFs and companies like Strategy Inc. that hold vast sums of coins.

The downturn has marked an abrupt retreat from Bitcoin’s meteoric rise through much of last year, when the return of the crypto-friendly Republican to the White House sent investors piling into such tokens and the Wall Street vehicles that have sprouted up around them. The market started cracking this month as rising geopolitical tensions sent tremors across global financial markets and curbed risk taking. That sparked Bitcoin’s precipitous decline from mid-January and set off a self-reinforcing cycle of selling as funds liquidated assets to meet redemptions and unwind leveraged bets.

“The fear and uncertainty across the market is evident,” said Chris Newhouse, head of business development at Ergonia. “Without conviction-based buyers willing to lean into the selling, each wave of ETF redemptions and liquidation cascades.” He said that’s “amplifying the magnitude of each leg lower and reinforcing the defensive positioning that’s keeping organic demand on the sidelines.”

The slide has echoes of the one in 2022, when prices retreated sharply from the surge seen during the easy-money era of the pandemic as the Federal Reserve tightened monetary policy. It has already taken a toll on intermediaries like the exchanges Coinbase Global Inc., whose shares have tumbled more than 30% this year, and Gemini Space Station Inc., which said it plans to cut up to 25% of its workforce and wind down operations in the UK, European Union and Australia.

This time, Bitcoin and other cryptocurrencies are also seeing competition from other forms of speculation, like legalized sports gambling and prediction-market wagering on everything from politics to entertainment. At the same time, retail flow continues to chase zero-day options in equities and higher-yield crypto plays across decentralized exchanges.

The latest drop comes as digital assets face continued doubts about their real-world use, as well. Once touted as an inflation hedge or a rival to gold or the US dollar as a stable store of value, Bitcoin has continued to trade more like a high-risk asset and has failed to serve as a haven during times of financial market stress. In fact, its growing presence in institutional portfolios has at times made it more vulnerable to broad de-risking, particularly during bouts of volatility in tech equities and precious metals, like what has been seen in recent weeks.

“Momentum has taken over right now and crypto bear markets tend to end more in apathy than despair,” Ryan Rasmussen, director and head of research at Bitwise Asset Management. 

“We are currently in the despair phase of the drawdown,” he said. “That momentum has taken over.”

Inflows into US spot-Bitcoin ETFs had acted as a leg of support for much of 2025 as tens of billions of dollars flowed into the products and helped buoy the token’s price. But those flows have reversed as prices have plummeted — and about $2 billion has come out of Bitcoin ETFs over the past month alone, data compiled by Bloomberg show. The figure is even starker when looked at over the past three months, with more than $5 billion yanked out.

The meltdown of the largest cryptocurrency has rippled through the digital-asset world, with smaller, less liquid speculative tokens down even more. The MarketVector Digital Assets 100 Small-Cap Index, which tracks the 50 smallest digital assets in a basket of 100, has plummeted around 70% over the past year. 

Traders have become increasingly defensive in the options market. Medium-term contracts such as those expiring in late June are pointing to an even more bearish outlook on token prices with the most open interest clustered around $60,000 and $20,000, according to Deribit.    

Ilan Solot, senior global markets strategist at Marex, said the recent selloff has been fueled by several factors, including the downturn in some tech stocks, the outperformance of gold, the broader risk-off sentiment and general questions about the framework for evaluating the value of cryptocurrencies.  

“The outlook is probably still bearish for now, but the worst might be behind us,” he said. “Still, these types of moves have historically always been buying opportunities for multi-year investors and many will see it that way.” –BLOOMBERG

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