TOKYO – Japan’s Komeito party on Oct 10 said it would quit its coalition with the Liberal Democratic Party (LDP) throwing the LDP’s grip on power into uncertainty as new leader Sanae Takaichi awaits a parliamentary vote to confirm her as prime minister.

The exit marks a historic shift for the alliance that has ruled Japan for all but three years since 1999.

Komeito leader Tetsuo Saito told party members that the 26-year partnership had broken down over an “inadequate” explanation by the LDP of its handling of a political funding scandal that has roiled the ruling group.

He said Komeito would not back Ms Takaichi in the parliamentary vote expected later in October.

“We want the LDP-Komeito coalition to go back to the drawing board for now and bring an end to our relationship,” Mr Saito said.

Ms Takaichi, who the LDP picked as its new leader on Oct 4, takes over a party that is 37 seats short of a majority in Parliament’s lower house. Without Komeito, she will need the backing of at least two other parties to pass legislation.

The LDP also has a minority in the less powerful upper house of Parliament.

The centre-right coalition has been Japan’s ruling government to date except for 2009-2012, when the Democratic Party was in power.

Ms Takaichi’s selection as LDP leader last week has dampened market expectations for a near-term interest rate hike, sending stocks higher and weakening the yen.

She is known for her staunch support of former prime minister Shinzo Abe’s “Abenomics” stimulus policies.

Komeito’s departure could trigger an unwinding of the so-called “Takaichi trade”, which had been driven by investor optimism around fiscal stimulus. REUTERS