His appointment, which was part of a broader reform program in Japanese capitalism, immediately boosted the stockmarket operator's valuation after eight difficult years of stagnation.
Perceived as Japan's most dangerous activist—ironic for a former Nomura banker and figurehead of the country's financial establishment—Hiromi Yamaji rightly pointed out that nowhere else in the world were there more Japanese companies trading below their book value.
The impact of his initiatives can already be seen, with routine announcements of dividend increases and, for the first time, share buybacks, in stark contrast to the long period of lethargy that Japanese capitalism has experienced in this area. However, attempts to unwind cross-shareholdings between large national financial institutions are slow to bear fruit.
These recent developments have had a positive impact on the fundamentals of the Japan Stock Exchange. In yen terms, over ten years, revenue growth has been only 41%, with operating profit growth of 35%, but these gains are largely linked to the performance of the last two years. However, in US dollars, there has been complete stagnation over ten years, due to the continuous depreciation of the yen.
Trading at 14x its operating profit before investments, or EBITDA, the Japanese financial market operator's discount remains striking compared to its peers: Euronext is trading at 19x EBITDA, LSE at 21x and the NASDAQ at 22x.
As charity begins at home, Hiromi Yamaji himself launched a share buyback program for his company's capital. However, this remains very modest, with the number of shares in circulation falling by only 3% in four years.
