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I would like to wish everyone a happy new year. As we usher in 2018, I would like to offer my warmest greetings and wish everyone health and prosperity for the year.
First, allow me to take a look back at market conditions in 2017.
Last year, Donald Trump assumed the presidency in the United States; European countries held elections; a number of missiles were launched by North Korea; and, many other events unfolded throughout the year. Nikkei 225, however, remained stable within the range of JPY 19,000–20,000 from the beginning of the year to mid-September.
Thereafter, for two months from mid-September, price levels rose higher. In October, Nikkei 225 also staged its first 16-day winning streak since its inception with Lower House general elections taking place in the interim.
The market was booming in both October and November with daily average trading value of TSE’s 1st Section surpassing JPY 3 trillion. Going into December, as well, there was a record-breaking market capitalization for companies listed on the TSE 1st Section.
Under such market conditions, the IPO market also boomed. The nationwide IPO count for 2017 reached 96, seeing this figure rise by 10 from 86 for 2016.
Last year, the number of IPOs for companies with headquarters located in regions outside of Tokyo was 34, increasing by 3 from 31 the year before that. We will actively work to encourage IPOs throughout the country this year, too. We remain dedicated to contributing to the sustainable growth of the Japanese economy.
Beyond focusing on figures, it goes without saying that our greatest missions are to fortify core systems at our exchanges and continue to provide venues for trade.
To the end, JPX decided to commence construction of a new secondary center as a way to set up a framework for handling wide-area disasters. The new data center will be built and situated in the Kansai region, at a great distance from the primary center, which is located in the Kanto region.
JPX has a firm commitment to strengthening our efforts of sustaining firm market bases while living up to expectations as we rise above our competitor exchanges on a global scale.
In terms of advancements in fintech, as well, JPX was proactive in its initiatives throughout 2017, including running PoCs of blockchain and trial incorporation of AI into market surveillance. In 2018, we want to continue to pour our efforts in this area.
With the economic recovery under Abenomics as our tailwind, JPX has collaborated with the government to ensure the sustainable growth of Japanese enterprises by establishing Japan’s Corporate Governance Code and developing JPX-Nikkei 400 Index, among other efforts. We hope to guarantee the success of these efforts by taking an all-around approach to their advancement.
This year, too, we are determined to offer support in further raising corporate value as we continue to pour efforts into ensuring corporate governance is realized not just in form but also in substance, enabling JPX to contribute to the growth of the Japanese economy.
Next, I would like to make a few remarks as to the market in 2018.
Hopes and expectations that Abenomics would be advanced was one of the driving forces that served to boost market sentiment from September 2017 forward.
The greatest factor determining stock prices is corporate value. At the root of that is each company’s ability to generate revenue. The ROE of Nikkei 225 constituent companies is rising to 10% territory, meaning that earnings power is certainly improving.
Furthermore, 2018 is the year of the dog in the Chinese zodiac. The old adage for the stock market in Japan says that "dogs smile", which is a good sign for this year.
Moving forward, as long as an environment where companies’ earnings power stands firm doesn’t change too much, I am certain the forecast for the Japanese market is favorable.
Finally, it is worth noting that this January marks exactly five years since JPX was born from the business integration of TSE and OSE.
We are grateful for the support JPX has received over the years and hope to continue building rapport with all stakeholders and society as we move forward together in the New Year.
Akira Kiyota
Director & Representative Executive Officer, Group CEO
Japan Exchange Group, Inc.
