TOKYO May 28 Japan's listed companies have
stepped up share buybacks and are paying close to record-high
returns, including dividends, to shareholders, encouraged by
improved profits and pressure to boost return on equity (ROE), a
Nomura analyst said.
Nomura analyst Kengo Nishiyama said on Wednesday that share
buyback programmes announced by Japanese companies exceeded 100
billion yen ($980 million) in each of the six consecutive months
It was the longest streak of buyback announcements exceeding
100 billion yen since a 22-month run through November of 2008,
"We're seeing more companies saying they want to operate
with a greater awareness of corporate value and capital
efficiency," said Nishiyama. "Broadly speaking, there's a sense
that companies need to improve ROE, and boost shareholder
returns as well as margins."
Toyota Motor Corp said in late March that it will
buy back up to 1.89 percent of its shares worth up to 360
billion yen in what would be the automaker's biggest buyback in
more than a decade.
Several other Japanese companies, including Canon Inc
, have made similar moves amid calls for Japanese
companies to boost return on equity.
The average ROE among Japanese companies is around 5 percent
compared to over 10 percent in the United States and other
developed markets. Foreign investors have long criticised
Japan's corporate culture for neglecting shareholders. In an
effort to attract more foreign investors, the government has
been promoting a new stock index, JPX-Nikkei Index 400, which
takes ROE into account.
Nishiyama forecast total shareholder returns, including both
share repurchases and dividends, would total 11.4 trillion yen
for the fiscal year that ended in March 2014, up from around
10.3 trillion paid out a year earlier and close to a historic
high of 12.3 trillion paid for fiscal 2007.
He also said the final amount could exceed that estimate as
more companies have recently announced large-scale buybacks.
Yamada Denki, which operates discount electronics
stores, said on Tuesday it would buy back up to 50 billion yen,
or 16.8 percent of its shares outstanding.
($1 = 102.07 Japanese yen)
(Reporting by Ritsuko Ando; Editing by Matt Driskill)