Update : Jan. 04, 2011
As we welcome 2011, I would like to offer my warmest greetings and wish everyone health and prosperity in the year ahead.
In the last year, news such as reports that China's GDP has finally surpassed that of Japan have led to a rather enduring sense of pessimism throughout the country. The phenomenon in the world today is not a simple power shift from nations in the West to those in the East. It should instead be seen as the beginning of an astonishing tectonic shift where the wealth of the whole world is growing with advanced nations maintaining their affluence while nations left in poverty discover means of acquiring new wealth and goals.
Under these circumstances, we should be amazed at the fact that Japan is one of the largest economies despite its significantly smaller land area and population compared to the U.S. and China as well as its lack of any particular natural resources. Today, I would like to remind you again of the steadfast rules and societal systems of democracy and capitalism, the diligent and brilliant citizenry, and advanced technology at the foundation of Japanese economic power. These are assets that we can still be proud of today.
On the other hand, it is also clear that repeated economic measures aimed at stimulating demand in the past 20 years have not led to sustained economic growth. In contrast to Japan's real GDP growth for the past two decades which hovers halfway between 10-20%, U.S. growth exceeds 60%, while China's economy expanded by more than six times. It is clear that the past 20 years were deeply disappointing for Japan.
Sustained economic growth will not be achieved simply by stimulating demand directly. It can only be attained by transferring growth factors, such as capital and labor, from industries or companies with low productivity that narrowly hold on to past successes or vested interests, and continuously creating new business models from which new growth springs. The same should also be true for free trade agreements. I believe that we should not only raise the competitiveness of our existing export industries, but also take this golden opportunity to strive to make bold changes to the industrial structure, such as those aimed at transforming agriculture into a growth industry, and proceed with deregulation.
While establishing new businesses entails risks, a society or nation will not be able to acquire wealth without challenging uncertainty. People who start new risky businesses are essentially optimists, and history tells us that it is them to whom we owe civilization's progress. As such, we should not be praising critics or pessimists but instead fostering social values which support people who have the courage to take risk.
Government deficit from fiscal expenditure in the past 20 years has resulted in excessive corporate savings, while households tend to over save on an on-going basis. In recent years, excess savings can also be seen in various countries in Asia. Governments and exchanges have thus been called upon to build a fair and transparent capital market to provide investment opportunities for such funds to enable entrepreneurs who are up to the challenge to effectively participate in the flow of funds.
With this in mind, we, Tokyo Stock Exchange, have taken various measures, such as launching a trading system of the highest global standard, establishing TOKYO AIM, enhancing the function of Mothers, our market for emerging companies, improving the corporate governance of listed companies, introducing a remote trading participant system, as well as listing various ETFs including agricultural and industrial commodities. However, we have to admit our efforts have fallen short of facilitating the active circulation of risk money in the Tokyo market.
This year, in addition to making every effort to create a Tokyo market that is able to fully provide attractive investment opportunities and fund raising functions, we will also actively work with related parties to create an environment which facilitates people taking on risk.
We ask for your continued support and cooperation in our endeavors. Finally, I wish everyone a happy new year.
January 4, 2011
President & CEO
Tokyo Stock Exchange Group, Inc.