Exchanges encouraged to boost relations

By Kevin Cho  |   2008-6-11  |     NEWSPAPER EDITION

JAPAN'S and South Korea's stock exchanges should strengthen ties to compete better globally, the president of the Tokyo Stock Exchange Inc said in Seoul yesterday.

"In enhancing the efficiencies of the two markets, the financial industry will further develop," Atsushi Saito, 67, said at a seminar for executives. "The size of the pie shared by us will get bigger."

The Tokyo exchange aims to double the market value of its listed companies and products to 1,000 trillion yen (US$9.4 trillion) in the next three years, helped by increases in exchange-traded funds and derivatives products. The bourse has formed alliances with the NYSE Group Inc and London Stock Exchange Plc and owns a stake in Singapore Exchange Ltd.

An exchange-traded fund that tracks South Korea's KOSPI 200 stock index debuted on the Tokyo bourse on November 19.

Even as the exchange plans to expand in size and influence, some foreign investors say Japanese corporate governance trails global standards and dissuades investment.

The Asian Corporate Governance Association, which represents global institutions such as the California Public Employees' Retirement System, known as Calpers, met with exchange and government officials last month to push for recognition of shareholder rights and a ban on takeover defenses, Bloomberg News said.

Proxy battle

Japan's Electric Power Development Co is locked in a proxy battle with UK-based hedge fund Children's Investment Fund Management LLP, which is demanding higher dividends and changes to the company's board. Steel Partners Ltd, which has led a series of failed takeovers in Japan, spearheaded last month's management ouster at wig maker Aderans Holdings Co.

United States-based Southeastern Asset Management Inc will oppose the reelection of Nipponkoa Insurance Co's president at the firm's shareholders meeting, the Nikkei newspaper said yesterday.

"We should keep as low as possible any bias or the legal framework against foreign investment," Saito said. "We are making solid progress toward improving corporate governance."

The Tokyo bourse converted itself into a holding firm in August to prepare for a listing as early as next year.