TOKYO – A record wave of share buybacks by companies such as Sony Corp., SoftBank Group Corp. and Nomura Holdings Inc. has cheered investors who say Japan’s bosses are finally warming up to stockholder interests.
Japanese companies announced an unprecedented 6.059 trillion yen ($55.6 billion) of share repurchases in 2018, I-N Information Systems Ltd said.
That was 4 percent higher than the previous record set two years earlier, according to I-N’s data, which goes back to 2004. In the first half of 2019, announced buybacks have totaled 5.825 trillion yen, more than double the tally from the first six months of last year, I-N research shows.
The situation is very different from the US, where share repurchases are so common that they are politically controversial and widely seen as a key support for the stock market.
In contrast, investors and analysts have for years chided Japanese companies for being stingy with shareholder payouts and for hoarding more cash and securities than they need. Now, executives are being pressed into action by Japan’s corporate-governance code, introduced in 2015, and by activists and traditional investors who have become more demanding.
“Both pressures are coming together and Japanese management is gradually starting to understand what they have to do,” said Soichiro Matsumoto, chief investment officer at Credit Suisse Japan.
The result has been to prod companies to unwind so-called cross-shareholdings in other listed groups, trim cash hoards, lift dividend payments, set clear return-on-equity targets and buy back shares.
Foreign investors have typically shied away from Japan because of a lack of financial discipline, said Jonas Edholm, a global equity portfolio manager at Norway’s Skagen Funds. He said foreigners see buybacks as an “initial but important step toward closing the gap in capital allocation.”
Among the biggest actors is SoftBank, the technology and telecommunications giant, which has offered to undertake 600 billion