00:00We've been here for two years now. I know that. I have been rejecting it. But you've come today and
00:06I think it's at a time when your
00:07business is doing very well. So what's driving this surge. Well at this moment as you said that the global
00:14investors interest over
00:15Japan or Japanese market quite high. And we are trying to continue our efforts to improve the corporate governance of
00:24the
00:24Japanese companies and which also attract the global investors. So it's a very good virtual cycle to attract the global
00:32investors and the more improvement of the corporate governance kind of things. I think however we are still on the
00:38way. So we will
00:40continue to do our initiatives in the future. It's great to hear some optimism coming from our guests because right
00:47now we're
00:48seeing so much uncertainty around the world. How concerned are you that the virtual cycle might be disrupted especially when
00:54we
00:54don't know when the Iran war could end. Yeah. That's you know a global uncertainty impacted the global markets. That's
01:00for
01:00sure. And some of them are not under our control at all. So what we can do is that we
01:06will do promote whatever under our
01:09control which is you know Japanese companies in a corporate governance reform and also to enhance the Japanese
01:16companies residencies and the growth trajectory trajectory in the future. So that we will focus on it. I mean there
01:23has been a
01:24lot of trading momentum which has helped for your business of the Japan exchange. Do you expect risk appetite to
01:30take a hit
01:30if this whole geopolitical issue continues in the backdrop. Well I think you know because the Japanese economy as you
01:36know we are
01:37getting out of deflation. We have been suffering from deflation for more than three decades. And under the deflation as
01:44you know the
01:45cash is king. So nobody. Well willing to take risks. But now for a fourth consecutive years we have a
01:54more than two percent of the
01:55inflation. That means that everybody including individual investors as well as the corporate sector household sector. Everybody has to take
02:03very reasonable risks. And the equity market is you know provide providing them with a very good say return. So
02:12I think you know
02:13they are they are they have more risk appetite than ever. That's for sure. Well the concern now is will
02:18the Bank of Japan fall
02:19behind the curve given of course the oil surge right now. Well I think you know I'm not in the
02:26position to say anything on the
02:27policy making decisions of the Bank of Japan. However at this time I believe that you know that's a very
02:34notable thing
02:35is that the three members of the policy committee clearly mentioned that they are against the decision and government
02:43governor whether clearly mentioned that he is taking it seriously. So I think you know I believe that they are
02:50watching the
02:51overall situation and then we'll make a rational decision. Bloomberg intelligence thinking that your collateral
02:57management income could double if the BOJ delivers 225 basis rate hikes this year. Thoughts. Yeah well you know it
03:06depends on
03:06the markets not the policy interest rates only. So markets react react to the addition of the Bank of Japan.
03:17And yes if the
03:19market reacts in that way that our positive income over the collateral management will be increased.
03:27That's for sure. Based on how many rate hikes this year. Well I'm not sure. But I know I think
03:35you know even though I mean it's
03:36moves every day. OK. And what's really moving right now the Japanese yen I mean past 160 again. This actually
03:46helps foreign
03:47inflows going to the Japanese markets. Yes and no. Because you know I think a stable exchange rate is the
03:53best way for attracting global
03:56money. And you know we can get a lower return for the global investors and higher yen is a lower
04:05return for the
04:06globally. Higher return for global investors. But you know I think you know the stability is more important than volatility.
04:15But the
04:15exchange rate. Well you're looking at the fundamentals of the exchange rate and you look at the Japanese economy. Is
04:20it reflecting the
04:21fundamentals. Well my personal opinion is that 160 is too weak. I believe that there should be higher around around
04:3140 130 like kind of
04:33things. But you know the economy. But it's a well yes. Yes. Economic economical analysis a bit difficult to mention
04:42here. But I think you know it's kind of my
04:45feeling that you know it's a too weak. When it comes to the Japanese yen. We have heard from finance
04:54minister Katayama and all of those commentaries
04:57around it. We have seen rate checks also coming from the New York Fed not necessarily moving it. And then
05:02you're thinking is this actually
05:04speculation on the yen weakness side of things or is it just the global economy. You have a strong U
05:08.S. economy as well. Yes. I think
05:11basically it is you know dependent upon the you know strength of the economy. That's for sure. But at the
05:16same time in the short term volatility is
05:18not always dependent upon the economy strength of the economy. And I think at this point maybe yen gets higher
05:26and lower and dependent upon
05:28dependent upon the momentum of the market. And but that's a market. I think that's a natural nature of the
05:38market I think.
05:40Given the backdrop right now in Japan. What are your expectations for corporate activity at a time when also Japan
05:47is very much exposed to
05:49Middle Eastern oil. Especially when it comes to listing in Japan. Will it be attractive. I think you know yes
05:56it is attractive for those
05:58companies who would like to take advantage of the listing status. And nowadays as you said you know number of
06:05corporate actions including a record high
06:07number of M&M days and record high number of PE fund sponsored you know curve outs and also a
06:14reduction of cross share holdings all
06:16of those kind of kind of things are happening among those companies who believe in a listing position is beneficial
06:22for them.
06:25Japan is now the world's number two when it comes to shareholder activism after the U.S. That's incredible. Do
06:31you expect that level of engagement this year too.
06:34Well I think as for the active activism we call them engagement funds by the way. But you know I
06:41think you know as a market
06:43operator we are neutral about them. And because you know in order to keep the order to maintain the abundant
06:49equity equity equity and
06:51also price discovery functions. We need every types of investors. But I think you know generally speaking as external pressure
07:00can
07:00be used as a catalyst for you know default. And I think many Japanese companies are starting to see that
07:09you know engagement with the
07:10stakeholders can be used as a good discipline. I think so you know I don't know in the future active
07:17active activism in
07:19Japan may be more you know active or not. I'm not sure. However I think a number of Japanese companies
07:26have the potential to grow
07:29further. That's for sure. You've really been an advocate for all of these reforms in Japan and have pushed the
07:36need for engagement with
07:38shareholders. You're of course trying to really finalize the Japan governance code as well which is going through a revision.
08:02In
08:02I think as far as crypto is concerned as you may know that at this moment I mean the Japanese
08:09FSA had a special committee to
08:12discuss about the crypto currencies. And I think there the new revision of the law is at the diet. I
08:20think you know we will start
08:21forming some sort of a product about the cryptocurrency next year maybe. So we will do it. And also other
08:30than that I think you know
08:32the prediction market I think it's a bit difficult for us to adopt in Japan because you know because cleaner
08:40row kind of
08:41things you know. So there are only some of the horse races like bicycle races are allowed just because of
08:51the special law
08:53legislation on that. So if that's the case we can do it. But then other than that it may be
08:58difficult for us to start those kind of
09:01products in Japan. And before I let you go. I know that you met with finance minister Katayama last week
09:06as well because of
09:07Anthropics mythos and other central bank government way that as well as chief bankers. What was discussed and what are
09:15you expecting to do now. Well
09:17what we discussed is the detailed content of the discussion is probably you know the according to the government release.
09:26But I think the discussion was that we have to be prepared for new types of
09:31cyber attacks. And also especially by the anthropic mythos crowd mythos. And I think you know we have to be
09:39prepared as
09:40as industry not an individual company. And the government is more than happy to support our activities. So we will
09:49form up a kind of
09:51committee to discuss those kind of things in the future.
Comments