I would like to wish everyone a happy new year. As we usher in 2015, I would like to offer my warmest greetings and wish everyone health and prosperity for the year.
Looking back at market conditions in the past year, the first half saw the consumption tax hike dampen market sentiment, but the market recovered strongly in the latter half, lifted by a sequence of positive policy decisions. The Bank of Japan's additional monetary easing, GPIF's decision to increase its asset allocation ratio for Japanese stocks, and the government's postponement of the next consumption tax hike pushed the Nikkei Average to end the year past JPY 18,000 for the first time since 2006.
Average daily trading value of the TSE 1st Section remained robust at JPY 2.4 trillion, which is comparable with pre-crisis conditions. Derivatives average daily volume also continued to exceed JPY 300 million for the second consecutive year, after setting the record high in 2013.
The IPO market also saw continued dynamism, growing by 22 companies to reach 80 new listings for the year. The overall amount raised approximately doubled on a year-on-year basis, surpassing the JPY 1 trillion mark for the first time in 4 years. I consider 2014 a year that Japan's capital market recovered its intended functions, with the market supplying risk money to growth industries and creating added-value through efficient fund flows.
Moving into the new year, investors, in particular those overseas, maintain high expectations for the Japanese economy, and we must work to meet these expectations.
The outcome of the last general election can be interpreted as a sign of confidence in Abenomics. As such, we can expect stability in the political landscape and a continued pro-market environment in the future.
Up till recently, the market was driven by expectations for Abenomics, however, its substance and achievements will henceforth be subject to much closer scrutiny. We could even say that Abenomics will be assessed for its true worth.
We can see the positive effects of Abenomics gradually spreading beyond the financial markets to the real economy. Corporate performance is recovering and bringing increased capital investment, while consumer sentiment is improving in tandem with better employment and income situations.
To build on the momentum toward achieving sustainable economic growth, Japan must be prepared to bear some pain and implement bold and necessary reforms while the effects of economic stimuli last.
Fiscal consolidation should wait no longer, while actual reforms for growth including TPP negotiations, regulatory changes in the fields of agriculture, employment, healthcare, and corporate taxes remain fundamentally important.
As the market operator, JPX will also dedicate resources toward various supporting initiatives from the capital market.
To drive corporate transformation and growth, we will draft the Corporate Governance Code, which is poised to require listed companies to appoint more than one independent outside director, and further establish the JPX-Nikkei 400 as a Japanese equity benchmark through promoting its ETFs and futures markets.
As for IPOs, we will not rest on a fifth straight year of growth and will channel even more effort into supporting the development of emerging companies and providing excellent investment products.
Finally, in last year's opening address, I mentioned that JPX would embark on the significant task of reorganizing market operations and integrating systems. I would like to express my appreciation to all market users for their assistance in completing the task and smoothening the transition to our third year as JPX.
We hope to have your continued support and cooperation as we move forward together in the new year.
January 5, 2015
Atsushi Saito
Director & Representative Executive Officer, Group CEO
Japan Exchange Group, Inc.