Business / Corporate

Japanese firms buying back shares at a record pace

JIJI

Publicly traded firms’ purchases of their own shares are expected to hit a record in fiscal 2018, which ends next month, as they are increasingly focusing on the interests of shareholders.

Planned share buybacks for fiscal 2018 as of Sunday came to ¥6.7 trillion, about 50 percent more than the previous year’s total, according to I-N Information Systems Ltd.

The total is about ¥260 billion more than the previous record set in fiscal 2015, the financial data firm said.

Such buybacks boost returns on equity, a measure closely watched by investors, and improve the per share value of stocks by reducing the number of outstanding shares.

The efforts to increase returns to shareholders also come as the government is stepping up its campaign to have firms strengthen governance.

SoftBank Group Corp. announced plans Feb. 6 to buy back ¥600 billion worth of its own shares. The measure comes as the company’s shares are heavily undervalued, Chairman and Chief Executive Officer Masayoshi Son said.

On Feb. 8, Sony Corp. announced plans to acquire ¥100 billion worth of its shares. Both SoftBank Group and Sony shares have since risen sharply.

“Companies have more resources to spend on share buybacks after cutting back on capital expenditures, worried about the uncertain outlook for the global economy amid a U.S.-China trade fight,” Daiwa Securities Co. equity strategist Kazuhiro Takahashi said.

“Share buybacks are expected to spread further as companies are stepping up efforts to increase returns to shareholders,” Takahashi said.