TOKYO, Sept 30 — Japanese equities plunged today on the back of concerns that incoming prime minister Shigeru Ishiba will hike taxes in the world’s fourth-biggest economy.

Meanwhile, media reports said that Ishiba, 67, who won the leadership of the ruling party on Friday, will call a snap general election for October 27.

Ishiba, a former defence minister, was expected to be formally appointed prime minister by parliament tomorrow, replacing the unpopular Fumio Kishida.

Ishiba is finalising plans to dissolve parliament on October 9 ahead of general elections on October 27, public broadcaster NHK, four main national dailies and other media reported, without citing sources.

On Friday, Ishiba said he wanted to call an election to shore up his mandate "as soon as possible” but declined to say when a vote might take place.

Ishiba replaced Kishida as leader of the Liberal Democratic Party, which has governed Japan almost uninterrupted for decades.

Kishida resigned in the wake of a damaging party slush fund scandal which added to his unpopularity among voters angry at rising prices.

Ishiba is considering appointing Katsunobu Kato, former chief cabinet secretary who ran in the LDP leadership race, as finance minister, media reports said.

Gen Nakatani, a veteran former defence minister, will return to his old job while Takeshi Iwaya, another former defence minister, will come in as foreign minister, the reports said.

On Friday, Japanese stocks rose and the yen fell on expectations that Sanae Takaichi, a backer of former premier Shinzo Abe’s unorthodox "Abenomics” economic policies of ultra-low interest rates and tax cuts, would win the LDP contest.

Takaichi would have been the first woman prime minister in a country where men still massively dominate politics and business.

News of Ishiba’s victory came through after Japanese stock markets had closed — the yen rose — and immediately this morning investors dumped stocks.

The main Nikkei 225 index was down almost 4.5 percent, while the yen weakened.

Ishiba has said he supports the Bank of Japan, long an outlier among central banks, continuing to normalise its monetary easing policies.

He has also said "there is room for raising the corporate tax”, while promising to revitalise rural regions.

On Friday, Ishiba vowed to restore confidence in the LDP after the party funding scandal and to shore up defence ties among neighbours rattled by recent Chinese actions.

Kishida undertook to double Japan’s defence spending and oversaw an improvement in ties with fellow US allies South Korea and the Philippines.

Recent days and weeks have seen separate incursions into Japanese airspace by Chinese and Russian military planes, as well as North Korean missile tests. — AFP