Highlights from the 2025 Japan Securities Summit

Last week, SIFMA co-hosted the 14th Japan Securities Summit alongside with the Japan Securities Dealers Association (JSDA) and the Japan Exchange Group (JPX). The Summit offered a unique opportunity for U.S. institutional investors and other market professionals interested in promoting deeper cross-border investment between the U.S. and Japan to explore the outlook and key issues impacting economic and market performance. We were also honored that Mr. Shigeru Ishiba, Prime Minister of Japan, took time to record a special video message for the Summit underlining the importance of the capital markets.

The International Monetary Fund (IMF) is forecasting that growth in Japan will accelerate in 2025 and this positive tone was mirrored throughout the summit. The Japanese government is taking active steps to boost long-term economic performance. SIFMA members are pleased to see Japan actively promoting itself as a center for asset management and recognize the current JSDA focus on financial literacy – something SIFMA cares deeply about.

Today, the U.S. and Japan enjoy a strong ongoing diplomatic and economic relationship. According to SIFMA Research, Japanese firms have enhanced their footprint in some U.S. markets, underwriting (in 2024): 7.5% of asset-backed securities, 7.2% of corporate bonds, and 3.4% of total equities. This group of firms saw 1-2% market share growth in the latter two sectors over the last four years, outperforming the market in deal value growth. Additionally, after adding one new firm, there are now four Japanese firms acting as primary dealers, crucial to the functioning of the U.S. Treasuries market. Bilateral investment remains strong and contributes to the economic prosperity of both nations. Two-way portfolio transactions in securities between the U.S. and Japan totaled $1.6 trillion in 2023, more than doubling over the last decade. In 2023, U.S. portfolio holdings of Japanese securities totaled just over $1.2 trillion – having almost doubled over the past decade – and Japanese portfolio holdings of U.S. securities was over $2.5 trillion, a 41% increase over the past decade. Focusing on government bonds, U.S. holdings of Japanese government bonds has grown to almost $350 billion in 2023, a three-fold increase over 10-year period. As of 2023, Japan was the largest holder of U.S. Treasuries – having overtaken China in 2019 – holding $1.1 trillion, an increase of roughly 10% over the course of five years. The role of the U.S. and Japan as key investors in one another’s economies cannot be overstated.

A positive economic and financial outlook bodes well for future cross-border investment activity between our respective economies. Other strong foundations also strengthen the potential of our interlinkages. For example, in 2019, our respective countries established the U.S.-Japan Digital Trade Agreement which, amongst other things, protected the global digital eco-system by prohibiting data localization measures that restrict where financial institutions data can be stored and processed.

The longstanding economic and strategic relationship and friendship between the U.S. and Japan is essential to the long-term global stability and prosperity of our global markets.

Here are a few highlights from the Summit’s two panel discussions:

Addressing Economic Challenges in Japan: Prospects, Risks, and Opportunities

The first panel discussion focused on analyzing the economic impact of Japanese financial reforms, challenges that persist for Japanese companies, and the attractiveness of Japanese markets for investors moving forward:

• Panelists explained how Japan’s government has instituted reforms to overcome deflation and normalize interest rates as Japan aims to transition to a growth-oriented economy driven by wage hikes, increased labor market participation, and capital investment.
• The discussion also emphasized the challenges Japan’s economy faces and the growth opportunities arising from ongoing reforms and growing interest from global asset managers in Japan’s capital markets.

New Phase for the Japanese Stock Market: Changes Happening and Continuing

The second panel discussion further explored the impacts of governmental initiatives, the evolving Japanese corporate landscape, and geopolitical trends and events on the Japanese capital markets:

• Panelists noted positive trends in corporate behavior, including the increase of stock buybacks, more inclusive leadership with younger and more female managers, and compliance to corporate governance reforms.
• Panelists also discussed what improvements investors would like to see in Japan, including improved communication and articulation of long-term growth strategies, improved board representation, and the utilization of artificial intelligence (AI) to address Japan’s challenges, such as the labor shortage and language barrier.
• Despite these ongoing challenges, panelists expressed optimism about the short and long-term growth of Japan’s financial markets and its corporate sector.

Conclusion

These discussions at the Japan Securities Summit underscored the vital importance of the U.S.-Japan economic partnership and highlighted continued opportunities for growth and collaboration in the financial markets.

Authors

Kenneth E. Bentsen, Jr. is President and CEO of SIFMA. From 1995 to 2003, he served as a Member of the United States House of Representatives from Texas. Prior to his service in Congress, Mr. Bentsen was an investment banker specializing in municipal and housing finance.

Peter Matheson is Managing Director, International Policy & Advocacy, SIFMA.

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