JPX Head Saito Says Earnings Leaks to Local Press Not Unfair

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The outgoing head of Japan’s bourse is unperturbed about a disclosure practice that has characterized the nation’s stock market for years.

Publishing companies’ financial results in the local press before they are officially announced isn’t unfair, Atsushi Saito, chief executive officer of Japan Exchange Group Inc., told reporters in Tokyo on June 12. As long as media outlets aren’t trading on the information, it’s difficult to criticize them, he said.

Japan’s largest business daily printed full-year profit numbers for more than 40 companies on the Nikkei 225 Stock Average in the year ended March 2014, before the results were filed to the exchange, without saying where it got the information. The newspaper’s figures were more accurate than analysts’ estimates and the companies’ own forecasts.

While the exchange issued a statement in September reminding firms about appropriate disclosure of earnings, the reports have continued. Saito, who is set to step down from his role at JPX on Tuesday, chose to focus on press rights rather than stopping the leaks.

“Personally I don’t think it’s unfair,” he said, adding he didn’t think it was good either.

“I don’t know how they are getting the information. It’s a free competitive market,” Saito said. “We cannot criticize the competition of journalists.”

Nicholas Smith, a strategist at CLSA Ltd. in Tokyo, says the bourse should take a more robust attitude toward disclosure and its attitude is out of line with other developed markets such as the U.K.

Japanese individual investors “don’t believe there is a level playing field in the stock market,” Smith said by e-mail. “I sincerely hope Mr. Saito’s successor quickly distances himself from those comments.”

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