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Japan stock exchange chief says reforms are cutting down ‘aimless’ listings

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Japan stock exchange chief says reforms are cutting down ‘aimless’ listings

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The chief of Japan’s stock exchange said fewer companies were listing “aimlessly” as a result of its corporate governance drive and rising shareholder activism.

Hiromi Yamaji, the head of the Japan Exchange Group which controls the Tokyo Stock Exchange, said in an interview with the Financial Times that in the past, companies “just kept listing because it was prestigious”.

He added: “But now that is changing due to increased expectations from shareholders and because of the exchange’s own push to improve corporate governance.”

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The former Nomura banker, who took over JPX in 2023, introduced a radical “name and shame” regime in January to drive better valuations, particularly at listed companies with a price-to-book ratio of less than one, meaning the market values them below their book value. As of May, 34 per cent of Topix 500 companies had a price-to-book ratio of less than one.

The exchange’s campaign has helped, along with a weak yen and investors choosing Japan over China due to geopolitical tensions, to lift the country’s benchmark stock index above its bubble-era peak set in the late 1980s.

Buyouts have surged in Japan, with the total value hitting $4.2bn last year, the highest level since 2006, according to LSEG data. School operator Benesse Holdings and karaoke company Shidax were among the companies to announce plans to go private.

Yamaji said companies deciding not to list or to go private was a “healthy” sign: “If they decide to do this [not list] they may come back after they improve their operations and become stronger.”

At the end of June, 1,335 of the 1,643 companies listed on the exchange’s most prestigious section have complied with its request to outline plans to raise their valuations.

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JPX is updating the list monthly and has canvassed investors about the measures companies have taken in order to build a playbook for others to emulate.

Yamaji said he was ready to do more to encourage improvements in corporate governance. In the second half of the year, he intends to publish anonymous case studies of companies that are failing to properly address governance concerns.

He has also proposed new rules for the Topix index that could increase the required free float, adjusted for market capitalisation, of included stocks. This change could further reduce the number of listed companies by 40 per cent to an estimated 1,200 by the second half of 2028, he said.

JPMorgan analysts said changing the inclusion rules “could give small [and] mid-cap companies near the threshold for exclusion an incentive to improve their stock prices”.

There are other signs of progress. Cross-shareholdings, which were historically a way to cement ties between companies but have been criticised by investors for creating conflicts of interest and misallocating capital, are being unwound in many sectors.

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At the same time, corporate Japan is experiencing an increase in shareholder activism. CLSA said there had been as many activist events — such as investors taking positions or making significant suggestions to companies — in the first half of the year as there were in the whole of 2023.

Executives are under growing pressure. During the most recent AGM season, 64 per cent of company bosses achieved shareholder support of more than 90 per cent, down from 81 per cent in 2018, according to CLSA.

Executives including Toyota’s chair Akio Toyoda and SoftBank’s founder Masayoshi Son saw their support materially deteriorate this year. Toyoda has been grappling with data scandals at the automaker’s subsidiaries and Son has been criticised for what proxu advisers say is an unfavourable return on equity.

“Unearned re-election is getting rarer,” said Nicholas Smith, a strategist at CLSA in Tokyo.

Yamaji welcomed the development. “This does not happen unless domestic institutional investors are voting against the company’s proposal,” he said, “so, I think that’s good progress.”

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It Could Take Weeks Before Displaced L.A. Residents Can Go Home

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It Could Take Weeks Before Displaced L.A. Residents Can Go Home

The tens of thousands of people displaced by the devastating wildfires in the Los Angeles area are increasingly anxious to know when they can return home — or to what remains of their properties.

Officials say crews are working to reopen closed areas, snuffing out hot spots and clearing hazardous debris, but no timeline has been announced for lifting the evacuation orders.

Experts have warned that it could take weeks before people can return to the hardest-hit neighborhoods because of the amount of work needed to ensure the safety of residents.

Firefighters are still trying to contain the Palisades and Eaton fires, the biggest ones in the Los Angeles region, a prerequisite to allowing people to return. Both remained largely out of control on Wednesday evening, though their growth had slowed.

Captain Erik Scott of the Los Angeles Fire Department said the timeline for people returning to their neighborhoods can vary. It depends on the extent of the damage, which needs to be mapped and carefully assessed in every impacted community, he added. There is also the threat of hazardous materials, such as asbestos and chemicals.

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“We want people to have realistic expectations,” Mr. Scott said.

It took weeks in the aftermath of some previous destructive blazes for people to return. In 2018, the Camp fire destroyed most of Paradise in Northern California and killed 85 people. The final evacuation orders in that town were lifted more than a month after the fire started.

Similarly, after a devastating fire in Lahaina on the island of Maui killed more than 100 people in 2023, it was nearly two months before the first of the thousands of displaced residents could return to their properties.

The suppression of the fire is only one step in the process, according to fire officials. There are yet more safety and infrastructure issues to tackle. Workers need to clear and replace downed power lines, stabilize partially collapsed buildings and remove toxic ash from the ground.

“That’s why the orders are still in place,” said David Acuna, a battalion chief with Cal Fire. “It’s not just about the fire. There are all these other elements to address.”

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The grim search for human remains has further complicated efforts to clear neighborhoods. Officials are using cadaver dogs to comb through the thousands of structures damaged or destroyed in the fires to locate remains.

“We have people literally looking for the remains of your neighbors,” Sheriff Robert Luna of Los Angeles County said at a news conference on Monday. “Please be patient with us.”

Even for those whose homes survive, the lifting of evacuation orders does not necessarily mean they can return to live in them right away, warned Michael Wara, a climate policy expert at Stanford University.

“There’s going to be smoke damage,” he said. “There’s going to be the fact that you don’t have utilities.”

In Pacific Palisades, the recovery process was underway in its incinerated downtown. The air buzzed with the sound of jackhammers, bulldozers and tree shredders. Workers cleared debris, pulled down charred utility poles and ground up the skeletal limbs of burned eucalyptus trees.

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Ali Sharifi managed to inspect his lower Palisades home on Tuesday. Aside from a burned backyard fence, it was intact. Yet the destruction around it, including charred schools, churches and grocery stores, gave him second thoughts about returning.

“Who wants to live in a ghost town?” Mr. Sharifi said.

Erica Fischer, an associate professor at Oregon State University who studied the aftermath of the Camp fire, said that a fast recovery is not always a good one, especially if it means rebuilding in ways that contributed to the disaster.

Of the ongoing evacuation orders in California, she said, “I know it’s not convenient, and it’s disruptive, but it keeps people out of harm’s way.”

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Joe Biden says ‘oligarchy’ emerging in US in final White House address

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Joe Biden says ‘oligarchy’ emerging in US in final White House address

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US President Joe Biden has warned that an “oligarchy is taking shape in America” that risks damaging democracy, as he blasted an emerging “tech industrial complex” for delivering a dangerous concentration of wealth and power in the country.

Biden’s comments during a farewell address to Americans from the Oval Office on Wednesday night amount to a veiled attack on Donald Trump’s closest allies in corporate America, including tech billionaire Elon Musk, just five days before he transfers power to the Republican.

Biden said he wanted to warn the country of the “dangerous concentration of power in the hands of a very few ultra-wealthy people” and the danger that their “abuse of power is left unchecked”.

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He cited late president Dwight Eisenhower’s warning in his 1961 farewell address of a military-industrial complex and said the interaction between government and technology risked being similarly pernicious.

“I’m equally concerned about the potential rise of a tech-industrial complex that could pose real dangers for our country as well. Americans are being buried under an avalanche of misinformation and disinformation, enabling the abuse of power. The free press is crumbling. Editors are disappearing. Social media is giving up on fact checking,” Biden said.

Biden’s words were a reference to the world’s richest man, Musk, the owner of social media platform X and the founder of electric-vehicle maker Tesla, who gave massive financial backing to Trump’s campaign and has become one of his closest allies during the transition to Trump’s new administration.

Some of Silicon Valley’s top executives, from Jeff Bezos of Amazon to Mark Zuckerberg of Meta, have also embraced Trump since his electoral victory and are expected to have prime spots at the inauguration ceremony in Washington on Monday.

Biden also used his remarks to cast a positive light on his one-term presidency, which ended with the big political failure of him dropping his re-election bid belatedly in late July, passing the torch of the campaign against Trump to vice-president Kamala Harris — an effort that ended in a bitter defeat.

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Biden’s approval ratings have hit new lows as he bows out from the presidency and a political career in Washington that has spanned more than five decades. Just 36.7 per cent of Americans approve of his performance on the job, and 55.8 per cent disapprove, according to the FiveThirtyEight polling average.

Biden said he hoped his accomplishments would be judged more favourably in the future.

“It will take time to feel the full impact of all we’ve done together, but the seeds are planted, and they’ll grow and they’ll bloom for decades to come,” he said.

Biden has not only faced seething criticism from Republicans, but also rebukes from Democrats who blame him for seeking re-election despite his advanced age. He is now 82.

Biden’s presidency was defined by a record-breaking jobs market and a robust recovery from the Covid-19 pandemic, as well as a series of legislative accomplishments on the economy. But the pain of high inflation became a massive political vulnerability for him.

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In foreign affairs, he took credit for western support for Ukraine after Russia’s full-scale invasion of the country in 2022, but his response to conflict in the Middle East, including staunch support for Israel’s war in Gaza, drew a strong backlash from progressive Democrats, undermining the unity of his political coalition.

It was not until Wednesday, with five days to go before he left office, that Biden — with help from Trump aides — was able to broker a ceasefire deal to free hostages held by Hamas. 

“This plan was developed and negotiated by my team and will be largely implemented by the incoming administration. That’s why I told my team to keep the incoming administration fully informed, because that’s how it should be, working together as Americans,” he said at the start of his address.

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Biden touts major wins in farewell address

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Biden touts major wins in farewell address
Biden touts major wins in farewell address – CBS Texas

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In his farewell address, President Biden warned an “oligarch” of “ultrarich” threatens America’s future.

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