That’s the most since he started tracking the data 24 years ago.įor the 2023 fiscal year, share buybacks have totaled around 8.6 trillion Japanese yen ($6.2 billion). Japanese firms bought back 9.7 trillion Japanese yen ($7 billion) worth of their own stock in the fiscal year ending March 2022, according to Frank Benzimra, head of Asia equity strategy at Societe Generale. At the same time, a spate of share buybacks has helped swell stock prices. “We take it for granted in the US and Europe that corporate management is trying to maximize the share price, but that’s by no means been the case in Japan for the last 30-odd years.”Ĭompanies tracked by the Nikkei index paid out record dividends in 2022. “There’s long been a lot of undervalued companies in Japan,” Atherton noted.
As a result, there has been little incentive for investors to buy the stocks if they don’t believe they can sell them at a higher price later on.Īn electronic board showing the closing numbers on the Tokyo Stock Exchange Kazuhiro Nogi/AFP/Getty Images The problem is that at least half of Japan’s companies have been stuck trading at a ratio of below one for most of the past 20 years. Half of companies listed on the Tokyo Stock Exchange trade at a PTB ratio of less than one, according to Man Group data from February, compared with just 3% of firms on the S&P 500.Ī low ratio means the stock is a bargain. It urged them to come up with plans to boost their price-to-book (PTB) ratios - that is, the firm’s share price relative to its net assets. JPMorgan analysts said last week that the “structural change” taking root in Japan could give the current market rally “staying power.”Įarlier this year, the Tokyo Stock Exchange began telling companies to pay more attention to their stock price. Japanese stocks have received their biggest bump from an overhaul of corporate governance rules that has compelled company executives to improve shareholder returns. Investors say Japanese stocks have benefited from relatively cheap valuations, a long-awaited return of inflation, and a weakening currency.Īn endorsement by Warren Buffett probably didn’t hurt either - the legendary investor told Japanese publication Nikkei in April that his flagship investment firm, Berkshire Hathaway, planned to increase its holdings in five Japanese companies.įoreign investors bought $15.6 billion worth of Japanese stocks last month, the highest monthly amount since October 2017, according to the Japan Exchange Group.įor years, investors have hoped modest rallies in Japanese stocks would translate into a sustained market revival for the world’s third-largest economy, which is also home to a raft of household-name electronics companies and carmakers, like Sonyīut this time, investors tell CNN, really is different. “In my 33 years in the market, things do seem probably more positive now than they’ve seemed at any time in that whole period,” said Jeffrey Atherton, an investment manager at Man GLG, a subsidiary of hedge fund giant Man Group.
The indexes have outpaced the United States’ S&P 500 and Europe’s Stoxx 600 benchmark indexes, which have both risen 8% in that time. (N225), which tracks Japan’s blue-chip companies, has leapt nearly 17%. So far this year, the benchmark Topix has jumped almost 14%, and the Nikkei 225 The country’s major stock indexes are trading at highs not seen since 1990, when its infamous asset bubble of the late 1980s was just deflating. Japan’s stock market has waited more than three decades for its moment in the sun.
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