Urging independent directors and asset management to "pressure" management, Japan continues to exert efforts on "daily special estimates" and says there is still much work to be done on "pulling valuations".

Japan continues to exert efforts on "Nikkei estimation". Financial regulatory agencies are urging independent directors to be more proactive in challenging corporate management. On June 9th, according to Bloomberg, Hitoshi Hirokawa, a senior official of the Japanese Ministry of Finance responsible for improving corporate governance, said that Japanese financial regulatory agencies hope that independent directors can "play their due role". Asset management companies should increase their participation to make companies "remain vigilant". Hirokawa hopes that institutional investors can interact more with companies, examine management policies and growth strategies, and actively provide feedback. However, he also recognizes that asset management companies face challenges in terms of limited time and resources. Hirokawa also stated that the goal of the agency is to enhance the value of companies in the medium to long term: In terms of valuation, it is difficult to say that we have achieved enough results. There is still a long way to go to achieve the ultimate goal. In recent years, Japan has followed the practices of the United States and Europe and introduced a series of corporate governance measures. These measures include authorizing external directors to make management more responsive to investors and other stakeholders. However, so far, these efforts have not raised the valuation of most Japanese stocks to international levels. In March of this year, the Tokyo Stock Exchange stated that about half of the listed companies on the Prime Market and 60% of the listed companies on the Standard Market have a return on net assets of less than 8% and a price-to-book ratio (the ratio of stock price to net assets per share) of less than 1. In contrast, MSCI data shows that the return on net assets of companies in the MSCI Global ACWI Index is about 13.9%, and the price-to-book ratio is 2.63. To change this situation, at the end of March, the Tokyo Stock Exchange issued the "Notice on Achieving Attention to Capital Cost and Stock Price Management Requirements", requiring listed companies to promote management under the premise of realizing capital cost awareness and disclose improvement plans, etc., in order to improve corporate value and capital efficiency. These powerful measures have prompted Japanese companies to increase dividends and stock buybacks, and have made the valuations offered by the Japanese market more attractive than other developed markets. Data shows that in May, overseas funds net bought more than 1.86 trillion yen in the Japanese stock market, and the Nikkei 225 index has recently surpassed 32,000 points, reaching a new high since 1990.