The past year in the Japanese equity market has kept investors — and their sell-side sales teams — on their toes.
“[The] Japanese market reached an inflection point last year,” wrote Shinji Ogawa and Khahlil Kirtman, co-heads of Japan Cash Equity Sales, JPMorgan Securities Japan, in an email.
While 2024 saw the Tokyo Stock Exchange enter its second year of reforms encouraging listed corporates to focus on capital efficiency, there are also early signs of an end to a 30-year period of deflation. “Despite these changes, global investors remain underweight in Japanese equities,” Ogawa and Kirtman added. “We anticipate the level of interest from investors will continue to rise further.”
Yoshinori Arai, head of portfolio advisory of the Multistrategy Consulting Dept. for Nomura Securities, agreed. “Investor response was initially slow but beginning in March we saw a steady rise in inquiries from overseas investors. This surge in interest led to a strong performance throughout the year.”
Arai reported that Nomura’s sales team in Japan has worked diligently to persuade domestic investors not to overlook the transformations taking place within Japanese corporations. “We consistently provided updates on the reaction of overseas investors to the evolving landscape of Japanese corporates and the economy,” he added.
Members of II’s 2024 Japan Sales Team were recognized for the ability to keep the buy-side informed amid rapid change. After taking the crown last year, Daiwa has defended its title as the No. 1 sales team in the country.
Further down the leaderboard, there was a shuffling of the top providers. Nomura increased one position to take second this year, while JPMorgan had the ranking’s largest jump and moved from fifth place to third. SMBC Nikko Securities fell two spots to fourth, and Mizuho Securities was down one spot to round out the top five.
But Arai is concerned about consumption in the country. “The declining population in Japan, coupled with the vulnerability of elderly individuals with limited income amid potential inflationary pressures, presents a critical issue. It will be interesting to see how Japan addresses this systemic challenge.”
