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Japan?s push to make its companies more profitable is about to spread to the derivatives market.
The bourse operator will list futures on the JPX Nikkei Index 400 (JPNK400) from Nov. 25, a move analysts say will draw investors as disparate as the Bank of Japan, short-sellers, pension funds and day traders to the underlying measure. The shame gauge, as it?s known, started trading in January and has attracted about $4 billion so far in Japan, including money from the nation?s $1.1 trillion public retirement-savings manager.
The JPX-Nikkei 400 is an experiment in using a stock index to change how companies behave, with its designers gambling that as investments tracking the gauge increase, executives will adopt shareholder-friendly policies. The central bank?s decision last month to make exchange-traded funds following the index part of its stimulus rested on the availability of futures, according to SMBC Nikko Securities Co.
?Having futures will make the measure more convenient,? said Yasuhiko Hirakawa, a Tokyo-based senior fund manager at Sumitomo Mitsui Asset Management Co. ?Money from Topix futures and Nikkei 225 futures and options will surely flow to the JPX-Nikkei 400.?
Mizuho Securities Co. says the central bank may invest as much as 900 billion yen ($7.6 billion) a year in ETFs tracking the index, which picks 400 stocks with the best return on equity and operating profit. The plan is to shame executives of companies that don?t make it into stopping hoarding cash and making better use of capital, in order to make the cut.
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