Tokyo stock exchange needs more than an overhaul to attract foreign investors
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Loading... - Arif Siregar
- 04 Apr 2022
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The Tokyo Stock Exchange announces its biggest overhaul in decades to attract more foreign investors. Yet the stock market is missing something that these investors have long expected from companies with high growth potential.
Its operator, Tokyo Stock Exchange Inc., on Monday reorganized its four trading sections into Prime, Standard and Growth sections so that the roughly 3,800 listed companies are ranked under more separate rules to better target each market.
The reform came as Japan tries to establish itself in the Tokyo market as an international financial hub after its reputation was tarnished by a trading system failure in 2020 that caused an unprecedented trade shutdown of a whole day. The setback came in stark contrast to the rise of its American and Asian peers.
Investors and market watchers say they find the disruption less than appealing, saying they seek companies that create innovations to differentiate themselves from global competitors more than to improve market availability.
“There is certainly a feeling among investors that there are markets in other Asian countries with many attractive companies,” said Hidetaka Kawakita, an honorary professor at Kyoto University who specializes in market analysis. scholarship holders. “Compared to them, Japanese companies seem to be showing little growth and little increase in the value of their shares.”
The reorganization is designed to clarify the concepts of each of the three new sections to make it easier for investors to choose which stocks to buy. The operator also aims to incentivize listed companies to pursue their growth with more perseverance and to strengthen their governance to increase their enterprise value, by imposing higher requirements in terms of market capitalization and outside directors.
The TSE last carried out a large-scale restructuring of its commercial sections in 1961 when it introduced Section One and Section Two.
The Premier Prime Section, equivalent to the former First Section, is made up of 1,839 companies, more than 80% of the total listed in the previous Main Section, and is focused on inviting global investors.
A company in the new top division must have free float shares worth at least $10 billion ($81.6 million) that represent 35% or more of its outstanding shares. Read More...
