Japan activist group hails bourse reform as remedy for undervalued stocks

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A group of investors led by prominent activist shareholder Yoshiaki Murakami said a push by the Tokyo bourse for better capital efficiency will strengthen their crusade to reduce Japan's unusually high number of chronically undervalued stocks.

Japan is almost unique among major economies in the number of companies whose shares are worth less than their assets - almost half of those listed on the TOPIX500 index of big companies, compared with about 3% for the S&P 500 in the U.S.

The move is a testament that firms can no longer brush aside stock underperformance and must end the decades-long practice of asset-hoarding, said Hironao Fukushima, representative director of City Index Eleventh, who works closely with Murakami. He returned to the public eye about a decade later, resurfacing as an investor working with others including Fukushima and daughter Aya Murakami as an informal group.

"The PBR is a big factor in our selection of target companies," she said. "We've been trying to engage with management so that their shares would come out of a value trap."

 

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