TOKYO, May 14 (Reuters) - Japanese brokerage Daiwa Securities Group will keep a weather eye on prospects for expansion in Asia as a back-up to a domestic focus that has seen it ride back to profit on Tokyo’s surging stock market, the company’s chief executive said.
The country’s second-biggest brokerage after Nomura Holdings Inc slimmed down abroad after losses in the wake of the 2008 financial crisis. Buoyed by rampant Tokyo shares, it may now consider buying - or raising - minority equity stakes in some overseas partners, Chief Executive Officer Takashi Hibino said in a recent interview.
“We will consider capital alliances if the chemistry is right, if we can be sure that the partners are trustworthy and if they require injection of capital,” Hibino said. Daiwa has partnerships for mergers and acquisitions advisory, equity sales and other investment banking operations with financial firms in China, Thailand, Indonesia, Australia, Malaysia and Vietnam.
Daiwa’s own shares have more than doubled in value since Prime Minister Shinzo Abe took office in late 2012, launching an aggressive push to end deflation that has spurred strong gains in the Tokyo market. The benchmark Nikkei index is up nearly 90 percent since then.
Hibino’s brokerage last month published a three-year plan centred on further expanding its domestic businesses, for instance through sales of mutual funds to retail clients. But the plan also seeks to deepen Daiwa’s links with faster-growing economies in Asia.
But Hibino, who took over at Daiwa in 2011, didn’t disclose plans for any potential overseas purchases, and stressed Daiwa won’t rush into deals - nor aim for a majority stake in any partner companies.
“We will move step by step,” Hibino said.
Daiwa’s strategy is in stark contrast to Nomura Holdings. Its cross-town rival has pushed to expand around the globe through the purchase of the Asian and European operations of failed investment bank Lehman Brothers, as well as by building operations from scratch in the United States.
For now, Hibino remains optimistic about the domestic market. He said PM Abe’s expansionary policies would help push the Nikkei index to around 22,000 points by the end of the year from the current level of close to 20,000. That would be the Nikkei’s highest level in nearly two decades.
But Hibino was confident that even if the domestic market were to face a downturn, Daiwa will remain attractive for investors. He said he expected Japanese citizens will continue to keep shifting financial assets from savings into investments - and competition for their business is limited.
“There are only two independent investment banks in Japan,” he said. (Editing by Kenneth Maxwell)