Taizo Nishimuro, president of Japan Post Holdings, rings the bell during a ceremony at the Tokyo Stock Exchange in Tokyo Wednesday, November 4, 2015. In Australia, Japan Post has bought transport group Toll Holdings in a $6.5 billion takeover. Japan Post is focusing on freight transport and expanding overseas. Shares of Japan Post jumped almost 17 percent in the first day of trading after the company and its banking and insurance units raised a combined 1.44 trillion yen ($11.9 billion) in the world’s biggest initial public offering of stock this year.
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Shares of Japan Post Bank surged 14 percent to 1,656 yen at the lunch break in Tokyo.
Other governments have also sold off their postal assets recently, including the U.K.’s Royal Mail in 2013, and Italy’s Poste Italiane this year.
Abe is urging Japanese people to return to the stock market after decades of deflation gave them an incentive to hoard cash, and the government’s offer of the large majority of Japan Post shares to individuals is part of that effort.
The holding company was priced at 1,400 yen in the IPO, the equivalent of 0.41 times the book value of its assets.
“The Japan Post IPO has performed as well as expected this morning and on top of that we’ve seen a real sentiment boost based on the monster rally in the USA”, said Gavin Parry, managing director at Parry worldwide Trading. Junichiro Koizumi first drove the sale of Japan Post a decade ago, while in the 1980s Yasuhiro Nakasone had pushed the idea to sell public assets to citizens to foster a culture of shareholding and make the entities more efficient.
Koizumi had wanted to reduce wasteful government spending. A few of the proceeds will be used to rebuild areas in the northeast that were damaged by the 2011 quake and tsunami.
The sale of Japan Post is no longer so contentious because politicians and the electorate now recognize the need for economic reform, said Fujii of Kyoto University. All three businesses face a shrinking market as Japan’s population ages and declines.
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The GPIF in October made a decision to double the allocation for share holdings while slashing investments in low-yielding government bonds, in line with a push from Prime Minister Abe’s administration for greater returns and risk-taking.
