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Nomura was one of the companies that moved up the rankings, rising to the highest AAA rating in December as a result of support from seven of these fund managers.
Nomura’s profits grew rapidly along with the Japanese stock market. Profits at the company’s retail brokerage firm benefited from higher demand for stocks and insurance policies, and profits at its investment banking division reached their highest level since early 2017.
The amount of assets under management in the investment management business reached a new record. Meanwhile, management is confident that profits can continue to grow steadily.
While Japan’s economic growth is certainly slow, the actions of the Japanese government, regulators and stock exchanges, along with Nomura’s management team, bode well for Nomura, which derives more than three-quarters of its profits from the domestic market. .
Labor market reforms that make it easier to hire and fire employees are long overdue and should go some way to boosting productivity and profits for Japanese companies.
Meanwhile, improved disclosure requirements should make Japanese companies more shareholder-friendly, while tightening rules regarding complex “cross-shareholdings” (Japanese listed companies owning each other) This should pave the way for further acquisitions and mergers.
This year’s doubling of investment limits for the Japan Investment Savings Account, modeled on the UK’s Isa, is also a welcome move as the government seeks to encourage households to move their savings out of bank accounts and into stocks.
All of these developments are contributing to the growing profits of Nomura’s three main businesses in Japan. Analysts expect earnings per share (EPS) to rise 75% in the current fiscal year, which ends in March, compared to 2023, and by another third in 2025.
This is supported by Nomura’s strong financial position, which has enabled the company to buy back its own shares, further boosting EPS. In January, Nomura announced a share buyback program of up to 100 billion yen (531 million pounds), equivalent to about 4% of its market capitalization, until the end of September.
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