Japan’s Brokers May Curtail Foreign Plans

From Reuters

The big four Japanese stockbrokerages--whose overseas employment soared 35% this year--say foreign expansion is now likely to slow due to investors’ diminished stock appetites since the October crash.

“Investors’ attitudes worldwide to securities overall appear to have cooled and the market for corporate bond issues is also worsening,” an official of one of the firms said Monday.

In addition, fierce competition abroad may contribute to slow growth or even profit declines for industry giants Nomura Securities, Yamaichi Securities, Nikko Securities and Daiwa Securities, sources at the companies said.

The Big Four’s total overseas staff soared to roughly 5,200 in October from 3,800 a year earlier.


Industry leader Nomura reported that its overseas subsidiaries earned an estimated $291 million in the 1986-87 fiscal year, up just 1% from the year-earlier period. Yamaichi’s foreign units took in $118.6 million, up 33%, during the same period from increased underwriting in the Euromarkets.

No Cutbacks Planned

But Daiwa and Nikko both saw overseas profits plunge. Daiwa said its foreign earnings fell 29% to $113 million; Nikko reported an overseas profit decline of $65 million, down 30%.

Officials of the four firms said consolidated business results would be available next January but they would not show specific results of the overseas units. But while future growth may slow, officials at the brokerage firms say there will be no outright reductions in overseas activities.


“The big four will shift to programs which put more emphasis on efficiency in their overseas subsidiaries after the strong expansion in personnel and budgets over the past several years,” another official said.

“We have increased the size of overseas subsidiaries to meet the globalization of the securities markets, but the plunge in stock prices in October and the markets’ volatility thereafter will provide a good chance to review this program.”