Financial Associated Press, May 15 (editor Xiaoxiang) although the dust seal was broken for 34 years in March this yearFreebonusgaminatorThe rally of Japanese stocks has been blocked recently after an all-time high, but many industry insiders say Japanese companies are increasing dividends and share buybacks at a record pace, which is likely to provide further support for the market, which is on the verge of adjustment.
Fumio Matsumoto, chief strategist at Okasan Securities, said 53 per cent of Japanese companies that had reported results as of May 10 had announced plans to raise dividends in the current fiscal year.
A large number of Japanese companies have increased their dividends to shareholders at a time when the Tokyo Stock Exchange has forced companies to improve capital efficiency and valuations, and these positive measures have also contributed to the rise of Japanese stocks.
Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management, said Japanese companies were taking action. Investors welcome this.
In addition to dividends, the number of share buybacks announced is also at an all-time high. Japanese companies announced 1 in April, according to Goldman Sachs.FreebonusgaminatorA .2 trillion yen ($7.7 billion) share buyback program, the highest in the first month of the previous fiscal year.
These companies include Itochu, which Buffett bought, whose shares soared after the integrated trading house said it would buy back about 150 billion yen of shares. In addition, shares of real estate developer Mitsui Real Estate and industrial electronics maker Hitachi also rose significantly after the announcement of share buybacks.
Bruce Kirk, chief Japanese equity strategist at Goldman Sachs, wrote, "this indicates that the fiscal year ending March 2025 will be a record year for [Japanese stock] buyback announcements."
These dividend and buyback plans, which give back to shareholders, partly offset the disappointment caused by some Japanese companies' cautious profit guidance. The East Stock Exchange expects net income to grow by just 0.8 per cent this fiscal year, according to SMBC Nikko Securities.
Japanese companies have traditionally given relatively cautious guidance at the start of the fiscal year, so many investors expect to raise these guidance by the end of the year.
Kei Okamura, senior vice president of East Asia at Neuberger Berman, said investors now prefer which dividend increases are combined with long-term capital plans, such as higher overall dividend yields. This provides a clearer long-term perspective and has positive implications for stock prices.
"it is difficult for analysts and investors to incorporate share buybacks into their [valuation] models, but if they also change their dividend policy, it can be included in your model, so we have better visibility," he said. "
According to the schedule, the Japanese stock earnings season will enter its final sprint this week, with most of the companies that have not yet disclosed their results on Wednesday.