Japanese firms reduce share buybacks for first time since 2020

Published Fri, Apr 3, 2026 · 03:04 PM

[TOKYO] Japanese firms announced fewer share buyback programmes in the fiscal year ended Tuesday (Mar 31), marking the first decline since 2020. 

Listed Japanese companies announced 1,365 buybacks in the year ended Mar 31, down slightly from 1,399 a year earlier, according to data compiled by Bloomberg.

Uncertainty over US tariff policy under the Trump administration likely made companies more inclined to hold onto cash, while a sharp rise in share prices increased caution about buying back stock at elevated valuations.  

Growing fears over the Iran war may further curb buybacks, said Yoshiki Nagata, chief investment officer at EnTorch Capital Partners. “If it declines year on year, the relative attractiveness of Japanese equities could weaken.”

The pullback was the first since the Tokyo Stock Exchange started its corporate governance push in 2023 to boost capital efficiency.

Repurchases totalled a record 24.9 trillion yen (S$200.6 billion) in the previous fiscal year, up 27 per cent from a year earlier, partly reflecting Toyota Motor’s buyback of shares held by Toyota Industries as part of its MBO.

While the buybacks had pleased some investors, critics said firms prioritised shareholder returns over growth, including new investments and mergers and acquisitions.

“Until now, many companies have taken a straightforward approach – reducing equity to lift return on equity through buybacks and dividend increases,” said Keiichi Ito, chief quantitative analyst at SMBC Nikko Securities.

“But we may be starting to see more management teams seriously consider investing instead of conducting buybacks,” he said, adding that he views the shift as a positive development.

Shareholder returns by Japanese companies are likely to remain elevated after surging in recent years. Combined with record dividend payments of 21.7 trillion yen, total shareholder returns exceeded 45 trillion yen in the past fiscal year.

Buybacks are unlikely to drop sharply, with Japanese companies still sitting on sizable cash piles and returning excess funds to shareholders, said Tetsushi Wakayama, senior fund manager at Tokio Marine Asset Management.

Continued repurchases equivalent to about 2 per cent of market capitalisation should help underpin the equity market, he said.

“It is important to strike a balance-return excess cash flow to shareholders while maintaining disciplined investment to enhance competitiveness and drive growth,” Wakayama said. BLOOMBERG