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New Year’s Message from JPX Group CEO Kiyota

JPX LogoHere’s wishing you a happy new year. As JPX Group CEO, I would like to wish everyone health and success in 2019.

Let me first give a quick recap of the stock market in the past year.
Even as tensions from the Korean peninsula receded in 2018, many factors for alarm surfaced from time to time, among them, China-US trade frictions, the growing complexity of the situation in the Middle East, and uncertainty over Brexit.
Despite these, the Nikkei 225 momentarily breached JPY 24,000 for the first time since the bubble era. However, a subsequent slide in US stocks affected markets worldwide, pulling the Nikkei 225 back down below JPY 20,000 around the end of the year.

Turning to the primary market, Japan saw a total of 98 IPOs, the largest figure since the TSE-OSE merger. In these five years, we have identified some potential aspects of our market structure and the corresponding listing rules that should be improved.
As such, last year, we created an advisory group of external experts to discuss and review issues related to the market structure at TSE and its optimal form. We are gathering feedback and will take into account the needs of listed companies and investors as we consider the best way forward.
In recent years, JPX has joined the Japanese government in pressing onward on corporate governance reform aimed at enhancing corporate value over the mid to long term. Last year, we released a revision to Japan’s Corporate Governance Code to further strengthen the push for more substance in corporate governance reform.
As the market operator, we will continue to support listed companies in moving their corporate governance initiatives from “form” to “substance” so as to sustain corporate growth and enhance corporate value over the mid to long term. In doing so, we will do our part for the growth of the Japanese economy.

In terms of other JPX initiatives, 2018 was also the year for applying the finishing touches on our second medium-term management plan. We replaced our clearing system for listed derivatives, began using AI for market surveillance, shortened the JGB settlement cycle, enhanced our ETF market, and consolidated the trading unit for all stocks to 100 shares.
Besides aggressively pursuing initiatives to encourage ESG investment for the SDGs, which is a new management objective, we are engaged in discussions with TOCOM toward the long-term undertaking of bringing together securities and financial and commodity derivatives under a “comprehensive exchange”.
We will continue working to reinforce the market infrastructure and stably provide resilient markets for everyone to invest with confidence, and meet the expectations of our market users.

Finally, allow me to share my views on the market for 2019.
Despite many uncertainties, according to the OECD Economic Outlook released in November 2018, global real GDP is forecast to grow by 3.5%.
In Japan, the consumption tax will be raised. Reactions to past consumption tax hikes have invited concerns over the next one’s impact on the business climate, but the government’s bold stimulus packages and tax relief plans have assured me that the economy will avoid being pulled into a slump.

The US stock market started the year in turbulent mood, but we only have to look at how Japanese companies have worked to improve corporate governance and increase their earning power to feel confident about the year ahead.
With a new Emperor set to accede to the throne in May, the Rugby World Cup coming to Japan in the fall, and Tokyo preparing for the 2020 Summer Olympics and Paralympics, Japan is just buzzing with excitement and expectation for the future.

Incidentally, 2019 is the Year of the Boar in the Japanese zodiac calendar. There is a stock market adage, “the boar firms (i-katamaru)”. Stock prices might sometimes move downward in search of steadier ground. I hope that in the coming year we will see the boar trample hard to firm the ground below and set the stage for prices to soar.

Thank you for your warm support in the past year, and I hope to enjoy your continued cooperation in 2019. Have a good year ahead.