The largest brokerage and investment bank in Japan, Nomura Holdings (8604.T), announced a doubling of its net profit for the second quarter. This was attributed to a jump in equity offerings and retail brokerage fees, driven by a robust domestic stock market.
Nomura was able to counteract slow dealmaking and sluggish trading internationally thanks to its strong position in Japan, where the stock market is trading at 33-year highs.
With a profit of 35.2 billion yen ($235 million) from July to September, the company outperformed its asset management and investment banking divisions compared to the previous year, when a severe decline in the world’s financial markets severely damaged them.
Japanese businesses have been more eager to raise money this year through loans or stock markets. Companies must also consider strategic choices under shareholder pressure and stricter governance regulations. Consequently, robust stock offerings and active dealmaking in Japan led to a 19% rise in net revenue for Nomura’s investment. According to Chief Financial Officer Takumi Kitamura at a press conference,
Japanese companies are becoming more proactive in holding investment conferences. According to data provided by LSEG, Japan was the only primary market in the world to record growth in M&A this year. Deals involving Japanese firms increased in value by 14% to $111 billion in the first nine months of 2023.
The end of a protracted period of deflation and increased corporate interest in more efficiently allocating capital fueled investor desire for Japanese equities, which caused Nomura’s domestic retail division’s earnings to expand fivefold. Additionally, the corporation has stated that it is reallocating additional bankers to wealth management to serve wealthy families and business owners better.
However, pretax earnings at Nomura’s trading and investment banking divisions, housed under its wholesale division, fell by 59% as market players were cautious about aggressive trading in foreign fixed-income assets following a series of rate rises by the U.S. Federal Reserve.
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