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NEW YORK (Jiji Press) — Foreign investors have welcomed the Tokyo Stock Exchange’s efforts to promote reforms of listed companies, said a U.S. investor who has been involved in Japanese stock investments for over 30 years.
The Nikkei 225 stock average has approached its all-time closing high recorded in 1989 during the height of the country’s asset-driven economic bubble.
In a recent interview, veteran investor David Snoddy said that the Japanese market’s recent powerful performance reflected a positive response from foreign investors to the TSE, which in March last year urged listed companies to focus more on stock prices and capital efficiency.
Lauding the TSE’s move as historic, Snoddy believes that this was more effective in improving the way foreign market players view the market than other factors, such as the weaker yen and U.S. billionaire investor Warren Buffett’s buying of shares in Japanese trading houses.
On the other hand, Snoddy warned that there is a risk that foreign investors may pull investments from the Japanese market in the future.
Foreign investments that flowed into the market when Japan rolled out in late 2012 the Abenomics reflationary policy mix under then Prime Minister Shinzo Abe’s second administration disappeared in about three years, he said.
In order to address a similar risk, listed companies should try to attract more individual investors in Japan, Snoddy said.
Noting that retail investors in Japan tend to choose stocks that offer dividends and other perks, Snoddy suggested that companies lay out selling points that such investors are looking for.
An increase in long-term shareholders through shareholder returns will have a positive effect of curbing volatile stock price fluctuations, making the Japanese market an even more attractive investment destination, Snoddy said.
