Asia Adopts Japan's Shareholder Return and Governance Strategies

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Dec 02, 2024
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Japan's strategy to enhance shareholder returns, corporate governance, and market valuation is rapidly spreading across Asia. The country's decade-long structural reform plan has propelled the Nikkei 225 Index to record highs this year. From Seoul to New Delhi, governments and regulators are implementing their own reform plans, inspired by Japan's success. These initiatives, commonly referred to as "value enhancement," a term coined in Korea, are being adapted to local needs.

For investors, this trend has emerged at a crucial time, especially with potential economic challenges posed by U.S. trade policies. Signs indicate that "value enhancement" strategies can mitigate these threats. According to Vikas Pershad, a fund manager at M&G Investments Singapore Ltd., these reforms are timely regulatory measures that demonstrate the benefits of enhanced governance.

Since 2022, the Tokyo Stock Exchange has pressured companies to boost shareholder returns. In response, Japanese firms have increased cash returns to investors, reduced cross-shareholdings, and diversified their boards, particularly by adding more women.

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I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.