ROE at listed companies has continued to stagnate even as they achieve record profits. Despite high profit levels, weak ROE growth is said to be partly attributable to the background factors. Meanwhile, the yen has weakened, and analysis suggests that foreign exchange translation effects have inflated shareholders’ equity.
ROE at listed companies is said to remain sluggish even after they achieve record profits. ROE, an indicator of capital efficiency across companies, reportedly shows no improvement even when profit levels are high.
The yen’s continued weakness is said to have inflated shareholders’ equity through foreign exchange translation effects. The increase in the valuation of equity resulting from currency conversion may have caused ROE to move differently.
The article points out that improving capital efficiency and strengthening underlying earnings power are important to improving ROE.