I would like to wish everyone a happy new year, and also wish you prosperity and good health in 2014.
Last year, monetary easing on an unprecedented scale triggered a strong recovery in the stock market. The Nikkei Stock Average rose by more than 56% and the average daily trading value of TSE 1st Section stocks reached JPY 2.6 trillion to return to pre-financial crisis levels.
We also saw 58 IPOs, up 10 from the previous year, and a significant increase in the amount of funds raised by listed companies for capital investments and M&A.
We not only had direct market participation, but also saw assets of Japanese nationals managed by pension funds being channeled to the market, which created an efficient fund flow of risk money to growth industries. I think we can look back at 2013 as a year the fundamental functions of the capital market, such as creating wealth and added value, received a new breath of life.
Expectations for the Japanese economy remained high among overseas investors and they ended the year as net buyers of Japanese stocks by more than JPY 15 trillion.
We are also beginning to see the impact of Abenomics in the real economy. Consumer sentiment is turning more positive, corporate performance is recovering and leading to increased capital investment and an improvement in the wage conditions.
This year we must ensure further progress on these developments and work to turn these "hopes and expectations" among both domestic and overseas investors into a stronger "belief."
With TPP, regulatory reform, and tax revisions already underway, the growth strategy continues to gain pace. For Japanese corporations, this will also be a year where many look to companies for delivering results of management reforms while capitalizing on the improving competition landscape.
At JPX, we are working to encourage corporate reform and bring about corporate growth. For example, we are seeking to enhance corporate governance through the appointment of independent outside directors, and support the growth of emerging companies through IPOs.
As part of our ongoing efforts, today, we launched the JPX-Nikkei Index 400. The index is made up of 400 listed companies selected based on ROE, profitability, and other criteria. Through the establishment of this index and a market discipline that leverages on the incentives for inclusion, we hope companies will be even more motivated to change in their management toward more efficient capital use and investor-focused policies, and thereby bring about sustained growth in corporate value.
As for us, the most significant task this year is the integration of our derivatives markets that complement the cash equity market.
In July last year, we integrated our cash equity markets under TSE, creating a one-stop venue for trading more than 3,400 listed companies. We are now seeing positive effects in the form of increased liquidity for formerly OSE-listed issues and lower costs for listed companies and securities firms.
In the same way, I believe that the derivatives market integration planned for March 24 will vastly improve convenience for all market users by bringing Japan's major derivatives contracts, such as Nikkei 225 futures, TOPIX futures, and JGB futures, to OSE.
Today, the balance of the world economy is shifting from West to East, and we can expect the capital markets in Asia to become even more vibrant and sophisticated. To leverage the presence of Japan's capital market, contribute to Asian growth, and benefit from its dynamism, we must construct an attractive market that draws on the abundant funds in Japan and nurtures an entrepreneurial spirit. The completion of the reorganization of the JPX market functions with the integration of our derivatives markets will be the first step toward creating such an attractive market.
JPX will strive to enhance the functions of the capital market to facilitate economic growth and develop further together with Asian markets. We hope that you will continue to give us your cooperation and support in the new year.
January 6, 2014
Atsushi Saito
Director & Representative Executive Officer, Group CEO
Japan Exchange Group, Inc.
