Corporate governance reforms boost Japanese Small Caps

Japanese equities, particularly small caps, are poised for significant growth due to recent corporate governance reforms, a recent market analysis by Van Lanschot Kempen states. According to the Dutch asset manager, the Japanese equity market is going strong largely due to the improving corporate governance reforms that have been gradually introduced since 2012.

“This has created a unique set of opportunities with companies now more open to advice from specialised investors willing to share their global expertise and best practice to improve shareholder value. While this already has had positive outcomes, the full potential is yet to be achieved,” a recent insight by Van Lanschot Kempen says.

The asset manager sees the market at an inflection point, noting that the number and amount of share buybacks have drastically increased, leading to expanded valuations. Additionally, they believe that board members are becoming aware that their actions positively impact the company’s share price, which could potentially create a self-sustaining process.

“With Japan embracing a new era of transparency and accountability, investors have the opportunity to participate in a market that is becoming increasingly aligned with global standards,” the asset manager concludes.