Japan's financial regulator is urging listed companies to use more of their large cash reserves for long-term investments instead of buybacks and dividends, Bloomberg News reported Monday, citing a senior FSA official.
Tatsufumi Shibata said executives consider using cross-shareholdings and real estate for growth, noting that Japanese firms often favor shareholder returns regardless of their growth stage, the news wire said.
Prime Minister Sanae Takaichi, aiming to revive the economy by redirecting corporate and household wealth into growth, has criticized idle cash, which, per Bloomberg data, rose 84% over the past decade to 130 trillion yen, the publication said.
Though the upcoming Corporate Governance Code revision has yielded gains such as higher market caps, Shibata said firms are not yet truly enhancing long-term value, and the new code falls short of mandating effective cash use, disappointing some investors, it added.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)