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The share buyback announced by Japanese companies in April almost tripled last year, with the board choosing to keep investors dry powder due to tariff uncertainty.
According to figures compiled by Goldman Sachs, the group listed on the Topix benchmark announced a 3.8 tonne ($27 billion) buyback from 1.3TN last year in April. This brings the total this year to 6.9 tons, more than doubled for the same time in 2024.
The significant increase in the first month of Japan’s fiscal year follows a record-breaking 20 tonne repurchase for fiscal year 2024. Analysts describe it as a “regulatory shift” in Japanese companies’ approaches to cash hoarding and balance sheet management.
Investors have historically accused Japanese companies of running highly inefficient balance sheets and being deprived of their stocks.
However, the group is beginning to think more carefully about the capital structure, such as returning more money to shareholders if there is no efficient way for shareholders to get jobs.
“We’re in a completely different kind of world,” Yamaji, a key figure in Japan’s push for stronger corporate governance, told The Financial Times. “In other words, whenever (the company) thinks it’s too low, they try to use the opportunity to manage the scale of their fairness.”
Japan’s largest investment bank and brokerage, Nomura, trade housing bishops and manufacturing conglomerates Hitachi and Komatsu have recently announced a repurchase for hundreds of millions of yen.
The April buyback, which spans industries such as automobiles, capital goods, insurance, telecommunications and banking, comes despite Prime Minister Isbaiba declaring a “national crisis” over US President Donald Trump’s trade policy.
US tariffs are already struck by Japanese car exports, and could spell even greater confusion if negotiations can’t reduce the broader “mutual” taxation threatened by Washington.
But Goldman Sachs Japanese equity strategist Bruce Kirk said the massive buyback figures showed momentum in driving shareholders’ corporate governance.
“Combined with the big corporate structuring announcement from Japan’s Blue Chip this month, there’s a lot of positive things,” Kirk said.
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Jeffries quantitative strategist Shrikanth Kahle said he hopes the momentum will continue given the still significant excess cash and stockholdings of other listed groups.
“I’m projecting a total of 2.2 billion yen this fiscal year, and the only risk is a serious decline in global growth caused by tariff uncertainty, which forces businesses into preservation mode,” Kale said.
Buybacks occur, despite the pushing investors to look beyond what they have characterized as a “vanilla” option to enhance shareholder support. They have called on the group to overhaul the board and sell non-core assets.
