Daily Management Review

Kishida Of Japan Publicly Advocates For Reformation To The Capital Market


Kishida Of Japan Publicly Advocates For Reformation To The Capital Market
At a speech to hundreds of international investors in Tokyo on Wednesday, Japanese Prime Minister Fumio Kishida publicly pushed for further capital market changes and emphasised asset management.
His attendance at a conference hosted by Wall Street bank Morgan Stanley (MS.N), opens new tab, was just another illustration of Japan's ongoing efforts to dispel the country's long-standing reputation as an unwelcoming place for overseas investment.
The fourth-largest economy in the world is becoming a more alluring market for foreign investors for the first time in decades. Japan's efforts to enhance business earnings and governance are beginning to pay off as the country emerges from years of deflation.
This year, the benchmark Nikkei share average achieved the previously inconceivable accomplishment of shattering its all-time high and has continued to rise. The government hopes to leverage on the enthusiasm and establish itself as a major worldwide hub for the asset management business, given the country's declining population.
"This administration is committed to furthering financial, capital market reform," Kishida stated.
"We are making the promotion of asset management one of our key pillars."
To move the nation's approximately $13 trillion in household financial assets—many of which are locked in cash or are idle in bank accounts—into more profitable investments, luring international asset managers is considered essential.
To facilitate asset management companies' establishment in Japan and enable them to conduct business in English, the government intends to create specific business zones.
To date, plans for the zones have been filed by Tokyo, Osaka, Fukuoka, and Sapporo.
Investors will hear from Kishida in June on the government's proposal on the zones.
In an interview with Reuters, Gokul Laroia, the chief executive officer for Asia at Morgan Stanley, stated, "The asset management industry in Japan is too fragmented".
"The industry's consolidation along with the macro tailwind will propel it forward," Laroia stated.
Driven by the government's initiatives, the biggest banks in Japan have hurried to expand their asset management companies.
With a long-standing strategic partnership with Morgan Stanley, the largest lender in Japan, Mitsubishi UFJ Financial Group (MUFG), has announced that it will reallocate resources to treble assets under management by 2030. As of March 2023, MUFG owned around 23% of Morgan Stanley, according on statistics from LSEG.
Rival Sumitomo Mitsui Financial Group said that employees from other business divisions would be moving to asset management.