Japan Post: this year’s biggest IPO

published 6 November 2015

767_Japan-post-634 — Will Japan Post deliver a shareholder culture?

Japan's government has raised $12bn from the initial public offering (IPO) of Japan Post, marking the biggest flotation in global markets since Alibaba in September 2014 and Japan's biggest privatisation since 1987. The holding company of Japan Post jumped by 26% on its first day, Wednesday 4 November.

Two financial units are also being sold off. Japan Post Bank rose by 15% andthe insurance division soared by 56%. This week's initial public offeringhas put 11% of each company in private hands. The plan is to sell all of the bank and insurer, and retain a third of the parent. Japan Post is a national institution and behemoth with around 24,000 branches, more than all of the coutry's banks combined.

What the commentators said

That's the view that Prime Minister Shinzo Abe takes, and it's "remarkable how little resistance" he has faced from his colleagues, according to Jesper Koll of Wisdom Tree Investments. Ten years ago, Prime Minister Koizumi's attempt to get it past his party foundered. "Japan's old guard is dying away."

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The hope is to "build a shareholding culture", said Anthony Fensom on TheDiplomat.com. Only 11% of Japanese households' money is in stocks, compared to 34% in the US and 18% in Europe. The IPO bodes well. Strong demand for the group's healthy yield of around 3% ensured a good start.

Citizens benefiting more from stocks is another element of Abenomics, the government's programme for ending stagnation. Meanwhile, money printing has weakened the yen, ensuring record profits for Japan's exporters. Throw in corporation tax cuts and still-reasonable valuations, and there is scope for the Japanese market to return a total of 10% over the next year, reckonedJohn Vail of Nikko.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.