Nearly 85% of firms on Tokyo bourse qualify to list on new prime market

Photo: Colton Jones / Unsplash.com

Nearly 85% of the companies listed on the top section of the Tokyo Stock Exchange will be permitted on its new “prime” market in an April rebranding, the bourse said on Tuesday, potentially diluting its goal of creating a more prestigious mainboard.

In Japan’s biggest overhaul of its equity markets in a decade, the TSE will adopt tougher listing criteria for its top category, hoping to highlight companies with strong profitability whose governance meets global standards, with the aim of luring more foreign investors.

Of 2,185 firms now listed on the main exchange, 1,841 have chosen the prime market, but 296 firms have not met the criteria, said the TSE, which is owned by Japan Exchange Group Inc..

Companies that fall short of the new rules can still stay on the prime market in an unspecified transition period by submitting improvement plans, a provision some investors say waters down the reshuffle.

Stricter rules for liquidity — market capitalisation in tradable shares of at least 10 billion yen ($90 million) with a tradable share ratio of 35% or more — are especially tough for small-cap firms or those largely owned by parent companies or business partners.

The number of firms that have failed to meet the criteria was “higher than we expected,” said Keiichi Ito, SMBC Nikko Securities’ chief quants analyst.

But Ito said the reform will prompt companies to unwind cross-shareholdings, the common practice in Japan where companies take stakes in partners to cement relationships.

“This is positive from corporate governance perspectives,” he said.

The bourse’s overhaul is part of a long policy drive begun under former Prime Minister Shinzo Abe to win foreign investors back to Tokyo‘s market, which Japan fears is increasingly overlooked by global institutional asset managers.

In the April 4 re-organisation, the exchange will reshuffle its four existing markets into three, designated as “prime”, “standard” and “growth”.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.