Corporate governance reforms making Japan appealing

Institutional investors in North America and Europe are optimistic about investing in Japan following new corporate governance codes, according to a report from BNY Mellon.

According to the research entitled, Investor Sentiment on Japanese Reform, investors are encouraged by Japanese PM Shinzo Abe’s ‘Third Arrow’ policies and by momentum in Japan’s corporate governance.

Out of 20 respondents, 65% viewed Abe’s policies as the most attractive aspect of investing in the region while 40% noted that the policies’ ineffectiveness in stimulating the Japanese economy as the largest risk.

Participants, comprised of 19 investment firms with assets under management of $679 billion, also noted the introduction of corporate governance and stewardship codes are key to driving shareholder returns.

In other findings 60% of respondents felt that the negative interest rate environment did not affect their investment viewpoint towards the country.

“Japanese issuers can better position themselves to international investors by prioritising capital efficiency and returns,” said Michael O’Brien, vice president, environmental, social and governance (ESG) advisory, depositary receipts, at BNY Mellon.

“Investors would like greater access to senior management and encourage consistent visibility through attendance at global conferences, company hosted investor events and regular global non-deal roadshows.”