Reforms at the TSE have increased the number of companies listed on regional exchanges, but trading value has stagnated and low-PBR stocks stand out, highlighting the challenges facing regional markets. The shareholder proposal at Noritake is also covered.
Against the backdrop of reforms at the Tokyo Stock Exchange, more companies are seeking secondary listings on the regional exchanges in Sapporo, Fukuoka and Nagoya. Trading value, however, remains substantially lower than on the TSE Prime Market, leaving challenges for revitalizing regional markets.
Orders in stocks listed on both the TSE and regional exchanges are often executed on the TSE, where trading is more active, limiting the scope for growth based solely on regional markets. Regional exchanges are therefore exploring ways to expand their role along a different path.
Some companies listed on regional exchanges have extremely undervalued stocks, with PBRs below 1x liquidation value. The difficulty institutional investors have in trading these stocks has been cited as one contributing factor. Noritake’s shareholder proposal was rejected, but attention focused on a review of corporate value and the preservation of the brand.
Regional exchanges are being pressed to strengthen roles beyond listing functions. The focus going forward will be on creating markets that promote dialogue between companies and investors and on cooperation with regional economies.