Japanese companies entice retail investors with stock splits
Japanese companies are increasingly moving to split high-value stocks in an effort to lure more retail investors, according to Nikkei research, as they grapple with the Tokyo Stock Exchange’s call for lowering the minimum amount required for investment.
In October, the TSE requested that listed companies lower the minimum investment amount, saying that a desirable range was more than 50,000 yen ($360) and less than 500,000 yen ($3,592).
As of late September, 202 listed companies had minimum investment amounts of 500,000 yen or more. Nikkei analyzed the stock split disclosures of these companies through the end of May and found 29 had already split their shares and that another 12 are planning to do so.
In other words, one in five companies has already moved to align its share price with TSE’s request.
Fast Retailing, the parent of the Uniqlo casual clothing brand, in March conducted a three-for-one split, the company’s first stock split in about 21 years. The minimum investment for the company had been about 8.31 million yen, the highest among listed companies as of last October, according to TSE.
Splits can be expected to stimulate investment activity. The number of Toyota Motor shareholders increased to 989,548 as of March, up 22% or 170,000 shareholders, after the automaker split one stock into five in October 2021.
The minimum investment amount was lowered significantly, to around 200,000 yen, attracting individual investors.
The minimum investment amount in Japan still differs significantly from that in Europe and the U.S. Data by QUICK FactSet shows that the median price for all companies listed on TSE’s Prime market was 182,450 yen as of June 5.
This is about 60 times that of major U.S. stocks and 120 times that of European stocks, which are priced at about 2,834 yen and 1,488 yen, respectively.
Even for Google and other giant tech companies, collectively known as GAFAM, one can become a shareholder by investing around 20,000 yen.
Some Japanese companies are moving to lower the minimum investment amount to levels similar to those in other countries. Nippon Telegraph and Telephone is planning a 25-for-1 split to attract young investors. The split will take place on July 1.
NTT’s current minimum investment amount is about 400,000 yen. The split will bring this down to the 16,000-yen range.
“After NTT’s announcement of the split, we received nearly 100 inquiries in about a month. Individual investors are very interested,” said a representative of Matsui Securities.
Market watchers say that companies and the TSE must continue their efforts to attract new investors and shift money from savings to investment to energize the market.