1961
The big four (Nomura, Nikko, Yamaichi and Daiwa) securities
houses start selling public and corporate bond investment
trusts.
Tokyo, Osaka and Nagoya Securities Exchanges open second tier. Until now the Tokyo Stock Exchange had mainly been comprised of the major corporations. In the late 1950s and the beginning of the 1960s prosperity and rapid growth of medium-sized companies prompt a reorganisation and listing on the second tier of the exchange.
The Japanese economy peaks followed by a period of restrictive monetary policy. This causes securities firms and the stock exchanges to become severely depressed.
1962
Deregulation of foreign capital investment. Overseas operations
expand rapidly.
1963
Because of the depression, the government allows significant
deregulation of the financial sector. This leads to the expansion
of overseas operations by Japanese financial institutions
and in particular, Daiwa Securities.
Daiwa Securities is the first Japanese securities company to place stocks in the US on the ADR market (in co-operation with First Boston). Daiwa sends its employees to foreign securities firms to study and to provide information on foreign markets.
1964
Japan joins the Organisation for Economic Co-operation and
Development (OECD) and liberalises capital transaction laws.
Daiwa America, a subsidiary company, is established in New York.
In April, Daiwa Securities London representative office opened in UK. While this is the company’s first representation in the UK, its association with Britain dates back to Meiji era (1868-1912). Toshiyasu Asao and Jiro Yamana are first Daiwa Securities representatives in London.
1965
Conditions worsen and in May many investors withdraw money
from Yamaichi Securities and Ohi Securities leading to a run
on the houses and a forced bailout by the Bank of Japan (BOJ)
of both companies. BOJ’s bailout is extended to the entire
securities industry.
For Daiwa Securities the depression is damaging. Throughout the period the company streamlines: the 110 branch network with 7,628 employees (1943) is reduced to 82 branches with 5,307 employees by the end of the year.
The government changes finance laws and issues a long-term government bond to expand public investment and stimulate the domestic recovery. Stock prices rise in a volatile market. The issuing of stocks at market prices and increasingly large government bond issuance become common.
Late 1960s
Securities market gradually recovers. The last years of the
decade see rapid economic growth. Following the recession
the government introduces several market reforms to help rebuild
the securities market. The first of these was a requirement
for stricter licensing of companies followed by tighter regulations
concerning personnel, assets and cashflow requirements. The
government also reforms the investment trust system whose
rapid growth was blamed as one of the causes of the recession.
The system was changed to an investor-oriented one.
The government abolishes baikai transactions (a mode of trading where the stock exchange itself plays an active role in placing orders and finding buyers when there is a big offering) and implements several price stabilising reforms. A new licensing system is introduced which leads to a cut in the number of securities companies from 511 in 1954 to 277 by 1968.
Japan’s trade surplus grows steadily and capital transactions increase. Japanese stocks are purchased heavily by overseas entities.
The first yen-denominated (samurai) bonds are sold.
The biggest development for the securities market is the issuance of stocks at market prices. Japanese securities firms had discussed such an idea previously. The success of the underwriting business leads to issuance of Yamaha stock at market prices, setting a precedent for the industry. Securities firms now provide lower cost financing than banks. This leads to a move away from bank lending to capital market financing and creates high expectations for the future of the securities market in Japan.
A boom of Japanese stocks in London. When Daiwa’s office was opened in 1964, the number of Japanese residents in the UK is less than 2,000. The number of Japanese residents in the UK in 1999 is approximately 55,000.
1968
Daiwa Securities obtains a licence from the Japanese Finance
Ministry as an integrated securities company.
Frankfurt representative office is established.
1969
Dreyfus Fund buys Japanese securities through Daiwa Securities.
This is the beginning of a popular investment market. Daiwa
is the first Japanese securities company to adopt price-earnings
ratio standards for evaluating its stock portfolio.
1970
The representative office in London is upgraded to Daiwa Securities
London branch (1 October).
Daiwa Securities is the underwriting manager for the first yen-denominated bond issue
