Japan Markets ViewIR Professionals Gather at TSE to Explore Minds of Institutional Investors

 

[Keiichi Nakayama, QUICK Market Eyes] On July 16, Investor Relations (IR) professionals from listed companies across Japan gathered at the Tokyo Stock Exchange (TSE) to participate in a seminar co-hosted by the TSE and Nomura Asset Management. The seminar was titled “A Message from Institutional Investors: From Asset Management Policies to How Listed Companies Should Disclose Information.” Approximately 130 IR professionals from listed companies attended, seeking to understand institutional investors’ perspectives and thought processes. Although the IR capabilities of Japanese companies are still seen as “developing,” this growing awareness of IR could further enhance the appeal of the Japanese market as a whole.

Fully Booked in Just 90 Minutes After Registration Opened
“To be honest, the response far exceeded our expectations,” said Minori Ishikawa of the TSE’s Listing Department, who planned the seminar, expressing surprise at the large number of corporate applicants. After the seminar information was unveiled to companies, the 150 available spots were filled in just 90 minutes. Due to high demand even after the registration deadline, arrangements were quickly made to stream the event via video. Approximately 110 companies participated in the video stream. Of these, about 50% were listed on the Prime Market, 30% on the Standard Market, and 20% on the Growth Market. In light of the strong demand from companies, the TSE plans to hold similar events across Japan.

The materials distributed on the day of the event totaled 116 pages. The speaker from Nomura Asset Management explained a wide range of topics. These included the perspective of institutional analysts, the viewpoints and thought processes of portfolio managers, the investment process workflow, case studies on engagement, and sustainability research.

Mitsuhiro Iso, Global Research Director at Nomura Asset Management, responsible for analyst operations, spoke passionately. “It is crucial to clearly communicate your company’s strengths, competitive advantages, business uniqueness, and growth story in comparison to competitors,” he said. He stressed the need to create a system where company-wide information is gathered by IR professionals. “I want IR professionals to be able to speak about their company’s future direction and their thoughts,” he urged. Mr. Iso also explained the importance of enhancing presentation materials and clearly specifying growth strategies and capital policies.

The presentation lasted for two hours with a break in between. After the seminar concluded, the speakers were flooded with questions from the attendees. Portfolio managers received many questions, such as, “How can we get on the radar of institutional investors?” The speakers were surprised by the participants’ enthusiasm.

Growing IR awareness among Japanese Companies, but Challenges Remain
Awareness of IR among companies is gradually increasing. According to the survey on IR activities published in June by the Japan Investor Relations Association (JIRA), 80% of top executives responded that their awareness has increased regarding the Action to Implement Management Conscious of Cost of Capital and Stock Price requested by the TSE. The results showed progress in IR, including expanded disclosure of non-financial information and an increase in engagement and IR events. On the other hand, challenges still linger. Among companies that conduct IR activities, 43.8% stated that they “do not have the resources or structure in place to improve capital efficiency based on the cost of capital.”

One institutional investor pointed out, “In Japan, there is an urgent need to develop IR talent and raise their compensation levels.” They also cheered the TSE’s initiative, seeing a need for many companies to expand their IR-related budgets and personnel. They noted with expectation, “There is still room for improvement at many companies, as some companies have worked to build a ‘fan base’ of investors through detailed data disclosure for each business segment,” for instance, by providing frequently asked questions about their financial results.

There are no shortcuts in effective IR. Investors, whether institutional or retail, will not commit to an investment without a deep understanding of a company. If companies improve their ability to communicate through fair disclosure, fostering a deeper understanding of more companies among a wide range of investors, it could ultimately lead to the revitalization of the entire Japanese market.

(Reported on August 12)

 

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