By Hideyuki Sano and Tom Westbrook

TOKYO/SINGAPORE (Reuters) – 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.

While the removal of political uncertainties will benefit Japanese stock markets in the short term, it is not clear if investors can trust him to continue with hard measures needed for improving economic health.

Kishida, 64, won a ruling party leadership vote (https://www.reuters.com/article/japan-politics/update-11-in-triumph-for-japans-establishment-kishida-becomes-ruling-party-head-idUSL1N2QV0M1) on Wednesday and is due to become prime minister next week.

His inheritors a strong economy, with falling coronavirus incidences, rising vaccinations, and a improving earnings outlook. All of these factors should help Japanese stock markets.

The Japanese share price has risen by 1.6% in this month’s trading, beating a decline of over 3% in Europe and the United States.

Kishida, according to most investors, is more predictable than rivals such as Taro Kono the vaccine minister, who has an antinuclear streak. Sanae Takaichi, a diplomat hawk and social conservative, also agree with this sentiment.

George Boubouras of K2 Asset Management said, “Kishida is a trusted pair of hands. Particularly on the diplomatic side.”

His long term as the foreign affairs minister of Japan under Abe was an evident positive signal for markets.

Kishida was a key postholder under Shinzo Abe, the former prime minister of Japan. He had previously been seen as an heir apparent to Japan’s longest serving prime minister who still has a lot influence within the ruling party.

Kishida is reserved and has been questioned about his ability or inability to drive through competitiveness reforms.

The pandemic exposed the age-old bureaucracy in Japan. Japan continues to fall behind when it comes to environment technologies. These are issues that the government should address,” said an investment director at a Japanese insurance agency.

The market will likely view this outcome as an attempt by the LDP not to make changes. Kishida, in simple terms, is stability. If you interpret it wrongly, however, then the ship will sink slowly. That won’t change.”

Although Abe made a promise almost 10 years ago that he would implement structural reforms, it energized investors. However many believe he failed to deliver on his promises.

Yunosuke Ikeda is chief equity strategist at Nomura Securities. “If Kishida shows an interest in structural reform, it would likely be appreciated and lead to flows into Japan’s stock market,” Yunosuke Ikeda said.

There are not likely to be any major policy changes in the immediate future. The election for the lower chamber must take place by November 28.

“Kishida immediately will have to handle an election campaign. Shinichi Ichikawa, Pictet Asset Management senior fellow, said it would be difficult to speak about painful reforms in the meantime.

“I do not believe that investors will create large positions prior to the election without knowing what policies will be put in place.”