Japanese Stock Splits

[rukawa]

I noticed that a large number of net-net stocks in Japan have recently reverse split their stocks. Wondering if anyone has any idea of what is going on:

 

https://ca.investing.com/stock-split-calendar/

 

See the septempber 27th stock splits.

[Lupo Lupus]

I am curious as well -- I also note quite a few of Japanese stocks on my watchlist doing reverse splits.

[Máscara]

It is in conexion with this, i guess:

 

"Stock exchanges nationwide hereby announce that the deadline for transitioning to 100-share trading units has been set as indicated below. The joint decision comes after reviewing responses from 1000-share companies to the “Survey on Transition to 100-share Trading Units”.

 

Deadline for Transition to 100-share lots: October 1, 2018

 

 

http://www.jpx.co.jp/english/news/1020/20160107-01.html

 

 

[NeverLoseMoney]

It is in conexion with this, i guess:

 

"Stock exchanges nationwide hereby announce that the deadline for transitioning to 100-share trading units has been set as indicated below. The joint decision comes after reviewing responses from 1000-share companies to the “Survey on Transition to 100-share Trading Units”.

 

Deadline for Transition to 100-share lots: October 1, 2018

 

 

http://www.jpx.co.jp/english/news/1020/20160107-01.html

Correct. I believe there are also some guidelines for the minimum investment required for a 100 share lot, I forgot the exact amounts. This is why you're seeing the reverse splits in conjunction with the change in trading unit size. If they hadn't done this, some of the stocks I own would have gone from a minimum investment of $5,000 to $8,000 for one trading unit to a minimum of $500 to $800. The reverse split lowers the previous minimum investment, but not as dramatically. I think September 27th is the date most Japanese companies use for going ex-dividend, so it's probably convenient to also make the switch to a 100 share lot at this date.

 

I wonder if these stocks will become more attractive to retail investors due to the lower minimum investment. Some of the smaller companies are just too small for institutional investors and seem to be mainly owned by insiders and retail investors.

[rukawa]

So wait let me get this straight. Exchanges reduced minimum lot size to 100 so companies did reverse splits to effectively increase the minimum investment. Seems like Japanese companies want to avoid having marketable shares with a large share holder base.

 

The survey indicates that a big concern of Japanese companies in the transition was how many shareholders they would have after the transition.

[NeverLoseMoney]

I believe the exchanges have written the guidelines for the range of the minimum investment. It might have been something like a 50k Yen minimum up to a maximum of a few hundred k. The Japanese are unlikely to make sweeping rule changes, it's all pretty gradual. They have taken some small steps in the right direction.

[Sergio8]

Anyway, the minimum investment is at least twice less in most companies in practice.

Of course, this does not mean that it will boost demand for the stocks that do the reverse split (and, to be honest, it doesn't really matter for me).