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Capital Markets

Japan: Pipeline offers equities hope as listings slump

JAL re-listing seen as likely market catalyst; Nikko AM and Nexon other possible listings

Japanese equity markets have been understandably subdued since the March earthquake and subsequent nuclear scare. The group of asset managers publicly declaring the post-disaster period to be an excellent buying opportunity have been mostly ignored by global investors still deeply sceptical about Japan’s recovery prospects and its long-term growth. New issuance has slumped accordingly: Dealogic data show that in the first half of 2011 equity volumes fell 54% on the same period in 2010 to $14.9 billion. IPOs accounted for just $289 million of that total.

Equity capital markets bankers in Tokyo say that this year is likely to continue to be difficult but that there are upcoming deals that could lift markets. Perhaps most advanced among these is the re-listing of the now restructured Japan Airlines, which has been nursed back to health under the stewardship of the Enterprise Turnaround Initiative Corp (Etic). Etic was originally established during the financial crisis with government money and some private-sector support to try to turn around failing small and mid-sized companies. However, it subsequently expanded its remit and took over the bankrupt national carrier Japan Airlines last year. JAL has cut costs by firing some 16,000 workers, retiring aircraft and cutting some of its more unprofitable routes.

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