The current fiscal year is expected to see the stock market in Japan supported not only by improving economic activity but also by dwindling pressure from the two main culprits behind stock weakness the previous year, according to a recent estimate by a private-sector think tank.
The stock market was largely pulled down in fiscal 2003 by two factors — corporate pension funds selling shares to return the portion of public pension assets they managed on behalf of the government, and financial institutions and their corporate clients selling each other’s shares to end their cross-shareholding relations.
Daiwa Institute of Research estimates that share sales aimed at returning the pension assets to the government will amount to 500 billion yen in fiscal 2004, down a sharp 85.7 percent from the previous year’s 3.5 trillion yen.
The steep decrease is expected because the return of these assets has peaked out as a result of companies’ pension reforms.
Daiwa also expects sales of cross-held shares to drop by 63.5 percent to 2.3 trillion yen from 6.3 trillion yen, amid advances in the liquidation of cross-shareholding ties.
Banks are expected to sell 2 trillion yen worth of cross-held shares, down from 4.3 trillion yen, while sales of these shares by corporations are likely to decrease to 300 billion yen from 2 trillion yen, Daiwa said.
By the end of September, most banks had reduced their shareholdings to less than their net worth. Corporations had bank shares totaling 5 trillion yen as of March 31, equal to 0.4 percent of their total assets and one-eighth the level of a decade earlier.