Nomura is among the companies to have risen up the rankings, climbing to a top AAA rating in December as a result of its backing by seven of these fund managers.
Nomura’s profits have boomed along with the Japanese stock market. Its retail brokerage profits have benefited from a growing appetite for shares and insurance policies, while its investment banking division’s earnings have hit their highest level since early 2017.
Assets under management in its investment management business have reached a new record. Management is meanwhile confident that profits can keep on growing strongly.
Granted, Japanese economic growth is slow, but the actions of the country’s government, regulators and stock exchanges, alongside those of Nomura’s management, bode well for the business, which makes more than three quarters of its profits in its domestic market.
Long-overdue labour market reforms which make it easier to hire and fire employees should go some way to improving the productivity and profits of Japanese companies.
Improved disclosure requirements should meanwhile make the country’s businesses more shareholder friendly, while tighter rules around complex “cross-shareholdings” – listed Japanese businesses owning each other – should pave the way for more takeovers and mergers.
A doubling of investment allowances this year for the Nippon Investment Savings Account, which is modelled on the UK’s Isa, is another welcome development, as the government tries to encourage households to shift their savings away from bank accounts into shares.
These developments are all helping to grow the profits of Nomura’s three main businesses in Japan. Analysts expect earnings per share (EPS) for its current financial year, which ends in March, to be up 75pc on 2023’s figure, and rise by a further third in 2025.
This is underpinned by Nomura’s strong financial position, which has allowed the company to buy back its shares, providing a further boost to EPS. In January Nomura announced a share buyback programme of up to 100bn yen (£531m), around 4pc of its market value, which will run up to the end of September.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
