Tokyo Bourse Works to Improve Chinese Investors' Convenience, Chief Says
Hang Yu
DATE:  Jul 01 2022
/ SOURCE:  Yicai

(Yicai Global) July 1 -- The Tokyo Stock Exchange is working on enhancing convenience for Chinese and Japanese investors, according to the chief of the Asian bourse.

"We will continue to work on further developments of capital markets in both countries," Hiromi Yamaji, president of one of the world's largest stock exchanges, said in an exclusive interview with Yicai Global. "We are always welcome and open to companies from all over the world, including China."

Below are excerpts from the interview.

YG: The TSE has been promoting its initial public offering business in Asia, targeting cross-border companies. What progress has been made in attracting foreign companies to go public in Japan?

Yamaji: "Yes, Japan is the third-largest economy in the world with household financial assets of around JPY2,000 trillion (USD14.8 billion), and also has a highly efficient market.

We'd like to take advantage of these characteristics by actively working to promote the attractiveness of the TSE for overseas investors and companies, particularly in Asia, and bringing them to our market. The IPO market in Tokyo has been strong in the past few years, and it is also highly rated, especially by Asian startups.

Last year, we had five listings of what we call cross-border companies. Cross-border companies have three types: companies that are based abroad, those which used to be based abroad but then re-established as a Japanese company, and companies with a foreign-born CEO. We have been doing IPO promotion, mainly in China, targeting this kind of high-growth cross-border companies which have links to Japan.

We are now seeing a good result of this. Actually, because of these five listings, the TSE has been getting more inquiries and requests for advice. Therefore, we have improved our information provisions on the Japan Exchange Group‘s website, including cross-border companies' listings. For high-growth cross-border companies with links to Japan, we believe that listing on the TSE is an optimal way to improve their corporate value. We are always welcome and open to companies from all over the world, including China."

YG: How can foreign companies benefit from listing in Japan?

Yamaji: "Because the TSE's liquidity is quite high, and also valuations are high compared with other Asian bourses. Moreover, you can raise ample amounts of capital here at the time of IPO, so you can get a high valuation and also good liquidity of the shares after listing."

YG: Japan Exchange Group, the operator of the TSE, has established the ETF Connectivity scheme with China's two stock exchanges in Shanghai and Shenzhen. Will there be other cooperation progress in the future?

Yamaji: "Sure, for the Japan-China ETF Connectivity, four ETFs tracking Topix and the Nikkei 225, Japan's leading indices, are listed in Shanghai. And one Nikkei 225 ETF is listed in Shenzhen. At the same time, there are six China-related ETFs listed on the TSE. They are providing Chinese as well as Japanese investors with new investment opportunities in Japanese and Chinese markets.

On the other hand, we recognize that there is a growing demand from Chinese as well as Japanese investors who wish to diversify their investments in global markets.

In order to respond to this demand, JPX is communicating with relevant authorities in Japan and China, as well as exchanges in China, to aim for cross-listings of other products, as well as ETFs. Until now, we have achieved cross-listings of ETFs between China and Japan in cooperation with the related parties, but considering the scale of the capital market in China and Japan, I am positive that there is huge growth potential.

The Japan-China ETF Connectivity scheme was a plan to start small and grow large. So in addition to the current initiatives I mentioned, we want to grow the scheme large, partly by promoting the markets to investors. In cooperation with the Chinese and Japanese authorities, as well as market participants, we will continue to work on further developments of capital markets in both countries and the enhancement of convenience for Chinese and Japanese investors. So I'd like you to keep watching our initiatives closely in the future."

YG: What is the current state of communication with Chinese authorities? Is there any particular corporation under discussion?

Yamaji: "At this moment, we don't have a specific date or products in mind yet. We've proposed some points about futures contracts. Both Japan and China have very active futures markets. So that's maybe the next area we'd like to collaborate on.

YG: What is the easiest path to deepening connectivity between the two countries' capital markets?

Yamaji: "Probably the easier part would be expanding the number of ETFs because it's already there. As I told you: five Japanese ETFs in the Chinese market, and six Chinese ETFs in the Japanese market. So we have a track record already. An expansion of the number of ETFs might be the easier way. But I'd like to expand to other product types such as futures contracts or options maybe. It will be broader, deeper market developments we will see. But it's more difficult, I think."

Editors: Tang Shihua, Emmi Laine, Xiao Yi

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Keywords:   IPO,ETF Connect,Financial Product,Tokyo Stock Exchange