Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Japan's Kishida makes public push on capital market reforms

Published 05/22/2024, 05:19 AM
Updated 05/22/2024, 06:27 AM
© Reuters. FILE PHOTO: Japan's Prime Minister Fumio Kishida attends a news conference in Sao Paulo, Brazil May 4, 2024. REUTERS/Jorge Silva/File Photo
JP225
-

By Anton Bridge

TOKYO (Reuters) -Japanese Prime Minister Fumio Kishida made a public push to woo foreign investment on Wednesday, pledging further capital market reforms and promoting asset management in a speech to hundreds of global investors in Tokyo.

His appearance at a conference held by Wall Street bank Morgan Stanley was another example of Japan's effort to shed a long-held image of being unwelcoming to foreign investors.

For the first time in decades, the world's fourth-largest economy is seen as an increasingly attractive market for global investors. Japan is emerging from years of deflation and its efforts to improve corporate profits and governance are bearing fruit.

The benchmark Nikkei share average shattered its all-time high this year - a once unthinkable feat - and has been climbing since. Given the country's shrinking population, the government wants to capitalise on the wave of interest and turn itself into a global hub for the asset management industry.

"This administration is committed to furthering financial, capital market reform," Kishida said. "We are making the promotion of asset management one of our key pillars."

Attracting foreign asset managers is seen as crucial to shift the country's roughly $13 trillion of household financial assets - much of it stuck in cash and lying dormant in bank accounts - into more productive investments.

As part of that, the government plans to establish special business zones for asset management firms to make it easier for them to set up in Japan and conduct business in English.

So far, Tokyo, Osaka, Fukuoka and Sapporo have submitted proposals for the zones.

Kishida told investors there would be an announcement about the government's package on the zones in June.

"The asset management industry in Japan is too fragmented", said the chief executive officer for Asia at Morgan Stanley, Gokul Laroia in an interview with Reuters.

"Consolidation of the industry, coupled with the macro tailwind is what’s going to drive it forward,” Laroia said.

Spurred on by the government's reforms, Japan's largest banks have rushed to beef up their own asset management businesses.

© Reuters. FILE PHOTO: Japan's Prime Minister Fumio Kishida attends a news conference in Sao Paulo, Brazil May 4, 2024. REUTERS/Jorge Silva/File Photo

Japan's largest lender Mitsubishi UFJ Financial Group (NYSE:MUFG), which has a long-standing strategic alliance with Morgan Stanley, has said it will reallocate resources to double assets under management by 2030. MUFG owns around 23% of Morgan Stanley as of March 2023, according to LSEG data.

Rival Sumitomo Mitsui (NYSE:SMFG) Financial Group said it planned to shift personnel to asset management from other business lines.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.