Overhauled Tokyo Stock Exchange makes debut

The Tokyo Stock Exchange opened Monday morning in a ceremony marking its biggest renovation in 60 years, but local and global investors said the streamlining effort is a wasted opportunity.

The historic reform, implemented at the beginning of Japan’s new fiscal year, is part of the TSE’s effort to fight US and Chinese markets for investors’ attention. appeal about Global Financial Center.

The stock market is now divided into three parts – prime, standard and growth – and replaces a more cumbersome system of four separate councils that were a legacy of different mergers.

The purpose of the reshuffle Was to create incentives around companies in the prime so that companies could improve governance and become more growth-focused and roughly shareholders. To wide disappointment, the turnaround did not significantly raise the membership threshold, resulting in 1,839 companies qualifying for the prime section.

Technically companies only qualify for the prime clause if they have a market capitalization of at least ¥ 10 billion ($ 81 million). However, some 300 companies that do not meet this requirement have been allowed to join by submitting an open plan that will meet standards at an undefined stage in the future.

Investors originally hoped that the minimum market value for the prime clause would be at least ¥ 100 billion.

Kazunori Tatebe, Japan’s stock strategist at Goldman Sachs, said there was particular resentment that the so-called elite premium clause now contains about 80 percent of the former’s cumbersome first part of the stock market. Some investors and analysts had hoped for an effective group of 500 companies.

“There are some positive developments, such as encouraging companies to sell their cross-holdings, but compared to three years ago when expectations of re-shuffling were high, investors can see that requirements have shrunk,” Taitaba said.

Akira Kyoto, head of TSE’s Japan Exchange Group parent company, said at the opening ceremony that the changes “will support sustainable growth and the improvement of the corporate value of medium- to long-term listed companies.”

In a separate interview with the Financial Times earlier this year, TSE CEO Hiromi Yamaji argued that the new standards would encourage companies to take issues like free floating and governance more seriously.

“The latest amendment to the requirement is likely to provoke a change in the minds of listed companies,” Yamaghi said, adding that the first major reform since 1961 had to always be carried out “carefully”.

“This is just a starting point,” Yamaji added. “We can not reclassify the market often, but we may refresh the content, just like the way we change the corporate governance code every three years.”

Overhauled Tokyo Stock Exchange makes debut Source link Overhauled Tokyo Stock Exchange makes debut

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