Jefferies’ 7 predictions for next 7 yrs

ONE OF THE TOP-PERFORMING MARKETS:

Japan to be one of the topperforming markets between 2023 and 2030. The great ‘shareholder return’ story in Japan has begun.

REGULATORY REFORMS AND TIGHTENING:

Jefferies expects reforms to snowball. Tokyo Stock Exchange (TSE), the Ministry of Economy, Trade and Industry, and the Financial Services Agency will continue introducing tighter regulations if companies do not respond adequately.

INSTITUTIONAL INVESTOR ACTIVITY:

A rise in institutional investor activity and deeper engagement by investors could create sustained value.

REFORMS:

This ‘reform snowball’, the note said, will push Japan Inc to transform in ways that have not been witnessed in several decades with over 80 per cent of Japanese companies responding to TSE’S request for performance improvement to enhance shareholder value..

CONSOLIDATION:

Jefferies expects domestic and friendly takeovers, hostile takeovers, cross-border partnerships/joint ventures/mergers and acquisitions to take centre stage in the next few years. Friendly takeovers (of select business segments, if not of entire companies) are likely to become the norm.

RETURN ON EQUITY (ROE):

Japan Inc will find religion in ROE (or a form of ROE — be it return on invested capital or economic value added), as it reallocates capital towards assets that can generate returns higher than the cost of capital.

GLOBAL FIRMS:

Over the next seven years, Japan Inc is likely to produce more winners that will shine on the global stage, creating several winners over the next seven years. “The automotive industry struggles this decade will be a case study — why speed is important when it comes to change,” the note said.