If the Japanese government implements “Big Bang” financial reforms as quickly and efficiently as it has promised, it will not only liberalize domestic capital markets, it will also help Japanese firms feel freer to “go public and go international,” according to Guang Xun Xu, a Nasdaq executive.
“With the deregulation, more and more financial products will be introduced into the country, and more and more companies will be using diversified methods instead of just sticking to one or two ways of raising capital,” Xu, Nasdaq’s director in charge of the Asian region, said in an interview with The Japan Times during a recent visit to Tokyo. He stressed that listing on Nasdaq, the world’s fastest-growing stock market with high liquidity, can help Japanese firms become more internationally minded, increase their visibility in the global marketplace, and allow them to obtain funds at a relatively low cost.
“I think it is entirely up to the corporate decision-makers” of each company to choose where and how to raise capital, Xu said. “But each country’s regulatory environment might have considerable impact on the decision-making of corporations in that country.”
One of the factors that has prompted Japan to conduct deregulation is the fear that a regulated market would send companies fleeing from the country. But Xu said he believes capital market regulations tend to make companies inward-looking and dependent on a limited source or method of raising funds,
He said he hopes more small and medium-size Japanese companies with growth potential will try listing on Nasdaq, since most of the 16 Japanese firms currently listed are major, well-known companies, such as Toyota Motor Corp., NEC Corp. and Japan Airlines. “Japan has one of the largest capital markets and (Japanese companies may think) they do not need money (from abroad), but money is not the whole issue,” he said.
To compete in the global business community, which is becoming more closely interconnected, increasing international exposure is indispensable to companies looking for good business partners, Xu stressed. The U.S.-based Nasdaq, the world’s first electronically conducted floorless stock market, has been attracting attention recently due to its high growth.
“You are free to come to Nasdaq, and you are free to leave Nasdaq,” Xu said, noting that 30 to 60 companies leave the market every year, including some that move on to the NYSE. Xu also said that listing on Nasdaq will make companies more responsible and accountable, in terms of management and shareholder relations.