The head of the Tokyo Stock Exchange, the world’s second-biggest bourse, doesn’t like what he sees in this global financial crisis.
Governments have turned to the wrong tools — massive public bailouts and greater regulation — which threaten to undermine the market’s long-term health, said Atsushi Saito, president and CEO of the Tokyo Stock Exchange Group Inc.
A longtime champion of free markets, he blames the crisis on abuse of the system rather than the system itself.
“It seems to me that the current state of the global economy is one in which the gods of the market have been angered and are now exacting severe punishment on Wall Street for having abused market function solely for its benefit,” Saito told reporters at the Foreign Correspondents’ Club of Japan Thursday. “In this sense, it seems that market mechanisms are working.”
Some economists, however, say the global recession would be far worse if the U.S. taxpayer hadn’t bailed out Wall Street banks and critics of free-wheeling capitalism blame loose regulation for allowing the abuses that caused the crisis.
Saito worries that Japan too may be headed toward an era of new restrictions.
Prime Minister Taro Aso’s Liberal Democratic Party is widely expected to lose its grip on the Diet in a general election next month after nearly 55 years in power. Polls suggest voters are leaning toward the Democratic Party of Japan, which was emboldened by a strong showing in the recent Tokyo Metropolitan Assembly election.
It’s unclear, however, what changes the DPJ will actually seek.
“I cannot figure out what they are thinking,” Saito said. “The market itself is still in confusion because (DPJ leaders) are saying a lot of things in general, very vague.”
But having read DPJ publications, Saito suspects the party wants a more controlled and regulated market — not exactly helpful for a man trying to transform the TSE into an Asian financial hub.
Under Saito, the TSE has increasingly sought out strategic partnerships with counterparts around the world in the name of internationalization. Last July, for example, it signed an agreement with the London Stock Exchange to establish a new Tokyo-based market for growing companies.
With 2,362 listed companies, the TSE had a market capitalization of about ¥309 trillion, or $3.3 trillion, as of June 30.
“Tokyo, I hope, will be defined as the center of Asian capital markets,” Saito said, noting Japan needs to shift away from relying so heavily on exports. “That is our dream and our business purpose.”
He stressed that improved corporate governance, not more regulation, is the key to attracting regional and global investors to Japan. To better protect shareholder interests, the TSE plans to introduce new corporate governance guidelines by the end of the year.