FACT BOOK [English] FACT BOOK | 日本証券業協会

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　Topics

1 Overall Condition of Securities Industry

2 Performance of Member Firms

2 Revenues

3 Expenses

4 Revenues and Expenses

5 Member Firms

6 Stock Market

8 Primary Market

8 Secondary Market

8 Public and Corporate Bond Market

10 Primary Market

10 Secondary Market

11 Investment Trusts

12 Investor Trends

14 Trends by Investor Type

14 Household Financial Assets

15 Stock Investment by Investor Type

16 Trends of Japanese Economy

18 Trends of Economy

18 Employment Conditions

19 Price Indices

19 Statistical Data

20 　Topics

1

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１ Merger of Stock Exchanges

　With the advance of electronic transactions and globalization, Japanʼs stock ex-changes have been facing ierce competition from the foreign exex-changes and oth-er rapidly emoth-erging electronic trading systems like proprietary trading systems (PTSs). Under these circumstances, in November 2011, the Tokyo Stock Ex-change (TSE) Group and the Osaka Securities ExEx-change (OSE) announced a merg-er of their opmerg-erations with a target date in January 2013. The mmerg-ergmerg-er of the TSE with its large share of the stock market and the OSE with its strengths in the Nik-kei 225 futures and the derivatives markets would give birth to an exchange group with a good balance of strengths in both cash and derivatives transaction mar-kets. The new exchange group is expected to develop as the worldʼs top class ex-change.

2 Measures to Improve Corporate Governance

　In the fall of 2011, there were a series of scandals uncovered about Japanese listed companies that caused severe damage to investor conidence in Japanese capital markets. The scandals included fraudulent accounting methods used to hide investment losses over a prolonged period of time and improper loans made to a related party.

　Noting the concern in the market, measures are being implemented from various aspects to improve corporate governance in Japan. Specific issues being ad-dressed are implementing corporate governance that utilizes the function of highly independent directors and improving corporate governance by expanding, reinforc-ing, and increasing the efectiveness of audit procedures. For the former issue, the TSE has introduced a requirement that companies listed on the exchange have outside directors in their exchange rules despite the government shelving plans to introduce such a requirement in Japanʼs Companies Act. For the latter issue, the Japanese Institute of Certified Public Accountants (JICPA) established a study group in December 2011 to examine the state of audits and corporate gover-nance. Furthermore, since May 2012, the Audit Committee of the Business Ac-counting Council has been discussing methods of dealing with the risk of fraudu-lent accounting practices, and plans to examine the content, etc., of audit reports in future.

3 Measures to Vitalize the Corporate Bond Market

　Japanʼs corporate bond market is still small compared with the markets in the United States and Europe. Moreover, the issuance of corporate bonds in Japan is still limited to fairly high-rated speciic companies. It is diicult for companies with poor credit ratings to issue corporate bonds. Moreover, the liquidity of the second-ary market is low, and compared with measures taken in overseas markets to im-prove investor conidence in recent years, Japanʼs eforts with the price informa-tion disclosure have not really been adequate. In addiinforma-tion to this background, corporate bond issuance sufered dramatic declines after the occurrence of the major earthquake disaster on March 11, 2011.

　Amid these circumstances, the JSDA set up a Study Group to Vitalize the Cor-porate Bond Market in July 2009. The study group set up sub-committees to fo-cus its deliberations on the four key issues of 1) a review of underwriting examina-tion by securities companies, 2) granting of covenants and informaexamina-tion disclosure, 3) corporate bond management, and 4) development of infrastructure for dissemi-nating corporate bond price information. The study group made public its report

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Overall Condition of Securities Industry

1

Overall Condition of Securities Industry

1 Performance of Member Firms

　In the i scal year ended March 2012, despite a decline in operat-ing revenues because of a drop in commissions and other factors, selling and general administration costs continued to shrink. As a result, the current proi t of member i rms improved ¥130.8 billion year on year, to ¥217.8 billion.

　On the other hand, an increase in deferred income taxes along with income tax revisions and the booking of extraordinary losses because of employee downsizing produced the second consecutive year of loss. Nevertheless, the loss improved by ¥245.0 billion to ¥25.7 billion.

　Furthermore, return on equity (ROE) recovered to minus 0.5%, gaining back 3.8 percentage points from a year earlier.

　Looking at net income/loss by type of securities i rms, major se-curities i rms posted a loss of ¥1.3 billion, recovering by ¥68.1 bil-lion from the loss in the previous i scal year. Major securities i rms include SMBC Nikko Securities Inc., Daiwa Securities, Co., Ltd., No-mura Securities Co., Ltd., and other securities i rms capitalized at a hundred billion yen or more. Foreign securities i rms registered a loss of ¥3.7 billion, falling ¥9.4 billion year on year, while other do-mestic securities i rms recorded a loss of ¥20.7 billion, improving ¥186.2 billion from last year.

　ROE by type of securities i rms was also mixed. The ROE of major securities i rms rose 2.4 percentage points compared with a year earlier, to minus 0.1%, while the ROE of foreign securities i rms fell 2.7 percentage points, to minus1.2%. The ROE of the rest of do-mestic securities i rms increased 6.0 percentage points, to minus 0.7%.

（FY ended）

（Trillion yen）（%）

-1.0 -0.5 0.0 0.5 1.0 1.5 2.0 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3

Current Proits Net Income ROE（right scale）

-10.0 -5.0 0.0 5.0 10.0 15.0 20.0

Notes: 1. Securities irms that were not in business as of the end of March in each year are excluded.

2. ROE is after-tax proits divided by average stockholders equity. Source: Japan Securities Dealers Association

Current Pro ts et Income oss and OE of Member Securities irms

Refer to page 20

（FY ended）（Billion yen）

Major Firms Foreign Firms Other Domestic Firms

-300 -250 -200 -150 -100 -50 0 50 100 150 12.3 11.3 10.3 09.3 08.3

et Income oss by Type of Member Securities irms

Refer to page 20

Notes: 1. Securities irms that were not in business as of the end of March in each year are excluded.

2. Major securities irms: SMBC Nikko Securities Inc., Daiwa Securities, Co., Ltd., Nomura Securities Co., Ltd., and other securities irms capitalized at a hundred billion yen or more (Up to iscal 2010 ended March 2011, Daiwa Securities Capital Markets Co. Ltd., was included in the major securities irms.).

Source: Japan Securities Dealers Association

-20 -15 -10 -5 0 5 10 12.3 11.3 10.3 09.3 08.3 （%）（FY ended） Notes: 1. Securities irms that were not in business as of the end of March in each year are excluded.

2. ROE is after-tax proits divided by average stockholders equity.

3. Major securities irms: SMBC Nikko Securities Inc., Daiwa Securities, Co., Ltd., Nomura Securities Co., Ltd., and other securities irms capitalized at a hundred billion yen or more (Up to iscal 2010 ended March 2011, Daiwa Securities Capital Markets Co. Ltd., was included in the major securities irms.).

OE by Type of Member Securities irms

Major Firms Foreign Firms Other Domestic Firms

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2 Revenues

　Among revenues, commissions decreased 13.9% year on year, to ¥1,634.9 billion. Commissions represent the total of brokerage, underwriting and secondary of ering, subscription and distribution, and other commissions. The decline in the i scal year under review can be attributed to a ¥75.2 billion drop in underwriting and sec-ondary of ering commissions, down 48.1% from a year earlier and the lowest level recorded in the past 10 years. Furthermore, re-flecting the depressed stock trading value caused by the weak stock market, a 20.7% contraction in brokerage commissions to ¥390.8 billion also contributed to the decline in revenues. 　Looking at the stock market, a combination of negative inl uenc-es caused the market to generally struggle upward unsuccuenc-essfully up until the end of 2011. Those dampening factors included a sense of uncertainty about the direction of corporate performances and the domestic economy in the wake of the March 2011 major earthquake disaster and the Fukushima nuclear plant accident and issues surrounding the European sovereign debt crisis. From the beginning of 2012 to the end of the i scal year, stock prices did move forward, stimulated by a cooling of the European sovereign debt crisis and the worldwide monetary easing policy being prac-ticed by Japan, the United States, Europe and others. The Nikkei 225 ended the i scal year at 10,083.56, recovering to the 10,000 mark, but had languished at much lower levels for most of i scal 2011. The daily average stock trading value of the TSE (1st Sec-tion) fell 16.6% in the fiscal year to ¥1,282.5 billion. Reflecting sluggish stock prices and the decline in trading value, stock bro-kerage commissions plunged 22.8%, to ¥358.6 billion.

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3

Note: Stock brokerage commissions of securities irms that were not in business as of the end of March in each year are excluded.

Source: Tokyo Stock Exchange, Japan Securities Dealers Association

Stock Brokerage Commissions and Daily verage Trading Value of the irst Section of the TSE

Stock brokerage commissions（left scale）

Daily average trading value of the First Section of the TSE（right scale）

（FY）（Trillion yen）（Trillion yen）

　Underwriting and secondary offering commissions dropped 48.1% from last year, to ¥75.2 billion. The reasons behind the sharp decrease are thought to be a decrease in capital increases and bond issues inl uenced by the major earthquake disaster, nu-clear plant accident, and European sovereign debt crisis. In particu-lar, equity i nance (public capital increases excluding those on Jas-daq), a highly profitable component of underwriting, had a large impact on the overall category, falling 86.9% year on year, to ¥383.5 billion.

　Subscriptions and distribution commissions edged down 6.4% from a year earlier, to ¥415.8 billion. In the i scal year under review, subscription and distribution commissions for investment trusts exceeded brokerage commissions, underscoring how investment trusts have become a core product for securities companies on a par with stocks.

　Trading gains grew 17.8% from i scal 2010, to ¥636.2 billion. Robust bond trading supported overall growth in trading gains de-spite poor performances by the currency and equities sections. 　Financial revenues decreased 5.2% year on year, to ¥406.6 bil-lion because of declines in interest on margin transactions and in stock lending fees along with the stagnation in the stock market. Margin transaction revenues fell for the i fth consecutive year. 　As a consequence of the above, operating revenues contracted 7.2% from i scal 2010, to ¥2,710.9 billion.

0.0 3.0 6.0 9.0 12.0 15.0 18.0 0.0 0.1 0.2 0.3 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3 Capital increases Straight bonds Convertible bonds

Underwriting and secondary ofering commissions REITs

Underwriting and secondary ofering commissions Capital increases and bond issuance

Notes: 1. Underwriting and secondary ofering commissions of securities irms that were not in business as of the end of March in each year are excluded. 2. Capital increases made in the JASDAQ market are excluded. Source: Tokyo Stock Exchange, Japan Securities Dealers Association

nder riting Secondary O ering Commissions and Capital Increases Bond Issuance

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3 Expenses

　A breakdown of expenses shows that almost all costs declined from the previous iscal year because of continued eforts to ratio-nalize and manage costs.

　Selling and general administrative costs, namely operating ex-penses minus the financial exex-penses, contracted 12.7%, to ¥2,286.1 billion, falling for the second year in a row. Transaction expenses, a highly variable cost among selling and general administrative costs, fell 19.6% from a year earlier, to ¥400.1 bil-lion, continuing its downward trend for the fifth year. Of that amount, commissions accounted for ¥180.5 billion, down 27.5%; communications and delivery expenses were ¥99.2 billion, down 8.9%; advertising expenses were ¥37.2 billion, down 13.0%; and others (travel, commuting, entertainment, etc.) were ¥39.3 billion, down 17.9%. Among transaction expenses, the drop in travel, com-muting, and entertainment costs can be considered the result of thorough cost management by securities companies. Among other expenses, employment costs decreased 9.8% from last year, to ¥996.2 billion against the backdrop of faltering business perfor-mances.

　Financial expenses declined 10.6% year on year, to ¥240.0 bil-lion.

　Overall, operating expenses declined 12.5% from iscal 2010, to ¥2,526.1 billion.

（Trillion yen）

Note: Securities irms that were not in business as of the end of March in each year are excluded.

0.00 1.00 2.00 3.00 4.00 5.00 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3

Subscription and distribution commissions Financial income

Underwriting and secondary ofering commissions Trading gain/loss

（FY） Others Brokerage commissions

Other

Operating evenues of Member Securities irms

Refer to page 21

（FY）（Trillion yen）（Trillion yen）

0 5 10 15 20 25 30 35 0.0 0.1 0.2 0.3 0.4 0.5 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3

Subscriptions and distribution commissions（left scale） Stock investment trust Initial fund amount（right scale）

Subscriptions Distribution Commissions and Stock Investment Trusts

Note: Subscriptions/distribution commissions of securities irms that were not in business as of the end of March in each year are excluded. Source: The Invest Trust Association, Japan Securities Dealers Association

Operating Expenses of Member Securities irms

Refer to page 21

（FY）（Trillion yen） 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3

Real Estate & Equipment Costs Financial Expenses Employment Cost

Others Transaction Expenses

Data Processing & Oice Supplies Costs

Note: Securities irms that were not in business as of the end of March in each year are excluded.

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4 Revenues and Expenses

　Because of falling brokerage commissions amid competition and other factors, the proportion of brokerage commissions in overall revenues has been declining annually. This trend continued in iscal 2011 amid the heightened uncertainty about the domestic econo-my because of the major earthquake disaster and nuclear plant ac-cident from the previous iscal year and the struggling of the stock market against the backdrop of the strong yen and the European sovereign debt crisis. The contribution of brokerage commissions to revenues lost 2.5 percentage points, dropping to 14.4%, the lowest in a decade.

　Conversely, the contribution of subscription and distribution com-missions has risen, climbing 0.1 percentage points from last year, to 15.3%, and exceeding that of brokerage commissions. This re-sult underscored how investment trusts have become a core prod-uct for securities companies on a par with stocks.

　Moreover, in recent years other commissions have made the greatest contributions to overall revenues, relecting the growing diversiication of securities companiesʼ businesses. The next major contributor was trading gains, the proportion of which increased 5.0 percentage points, to 23.5%.

　Looking at the composition of expenses, the major generator of expenses continues to be employment cost, the proportion of which increased 1.1 percentage points year on year, to 39.4%. On the other hand, the next major contributor, transaction expenses, declined 1.4 percentage points, to 15.8%. Data processing and of-ice supplies expenses accounted for 15.2% of overall expenses, edging up 0.5 percentage points from the previous iscal year. Be-cause of securities companiesʼ efforts to thoroughly manage costs, transaction expenses including travel, commuting, and en-tertainment expenses, declined 0.1 percentage points, to 1.6%. 　Overall, despite slight changes in the proportions, the composi-tion of expenses was essentially the same as in the previous iscal year.

（％）

Note: Securities companies that were not in business at March 31 were excluded in each iscal year.

0 10 20 30 40 50 60 70 80 90 100 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3

Subscriptions and distribution commissions Financial income

Underwriting and secondary commissions

Trading gain/loss Others Brokerage commissions

Other commissions

Operating evenues of Member Securities irms

（FY）

Refer to page 21

0 10 20 30 40 50 60 70 80 90 100 12.3 11.3 10.3 09.3 08.3 07.3 06.3 05.3 04.3 03.3

Operating Expenses of ember Securities irms

Refer to page 22

（FY）（％）

Note: Securities companies that were not in business at March 31 were excluded in each iscal year.

Real estate & equipment costs Financial expenses Employment cost

Others Transaction expenses

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5 Member Firms

　As of March 31, 2012, the number of regular members (securi-ties irms) decreased by 8, to 285, declining for the third consecu-tive year. Looking from a longer perspecconsecu-tive, it can be said that the number of regular members has come close to the level of 281 in 2002. From 2005, against the backdrop of the spread of regulato-ry liberalization, a good market environment, and other factors, many securities companies specializing in inancial futures, online trading, and investment trust sales newly entered the market. How-ever, the global financial crisis during the period from 2007 to 2009 caused the inancial conditions at many securities compa-nies to deteriorate, producing an increase in the number of regular members quitting the association after ceasing their inancial in-struments business. The current level of membership can be seen as the result of this trend.

　Mirroring this process, the number of employees of regular mem-bers expanded from 2005 to 2008, but has fallen of since 2009. At of December 31, 2011, the number of employees had contract-ed by 3,000 from the same period last year, to 88,000, declining for the third consecutive year. In the same manner, at December 31, 2011, there were approximately 532,000 securities sales rep-resentatives, a decrease of about 1,000 sales representatives year on year. Looking at a breakdown by member category, the number of securities sales representatives belonging to Regular Members (securities firms) was 73,000, declining about 2,000 from the previous year. The number of securities sales representa-tives belonging to Special Members (registered financial institu-tions) was 360,000, a decrease of about 2,000 sales representa-tives from a year earlier. Financial instruments intermediary service providers had about 99,000 securities sales representatives, ex-panding by about 3,000 sales representatives from the prior year.

（Firms）（Firms）

（End of FY）

-20 -15 -10 -5 0 5 10 15 20 25 11 10 09 08 07 06 05 04 03 02

Net Enrollment / Withdrawal (left scale) Regular Members (right scale)

240 250 260 270 280 290 300 310 320 330

egular Members Securities irms

Refer to page 22

（End of CY） Source: Japan Securities Dealers Association

75 80 85 90 95 100 105 11 10 09 08 07 06 05 04 03 02

egular Members Employees

（Thousands）

Refer to page 23

Financial Instruments Intermediary Service Providers belonging to Special Members Regular Members Special Members

Financial Instruments Intermediary Service Providers belonging to Regular Members

Securities Sales epresentatives

Refer to page 23

（End of CY）（Thousands） 0 100 200 300 400 500 600 11 10 09 08 07

Note: Excluding representatives of inancial instruments intermediary service providers that are individuals rather than companies.

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　The number of domestic branches of regular members was also on the decline, recording a reduction of 19 branches from last year, to 1,544 branches. The number of business oices was 362, down by 1 oice from the end of iscal 2010. Consequently, the number of domestic oices including head oices decreased by 28 oices, to 2,191, falling for the third consecutive year.

　The number of special members (banks and other registered i-nancial institutions) as of March 31, 2012 remained unchanged at 219. A breakdown by categories shows 6 city banks (unchanged), 14 trust banks (unchanged), 64 regional banks (up by 1), 42 sec-ond-tier regional banks (unchanged), 40 shinkin banks (un-changed), 12 life insurance companies (un(un-changed), 5 non-life in-surance companies (unchanged) and others. This stability may be related to the fact that special members are relatively less afect-ed by the impact of the market comparafect-ed with operators that spe-cialize in securities. Moreover, the recession in the securities busi-ness is less likely to immediately lead to the termination of their inancial instruments operator business.

Head Oice Branches Business Oices

egular Members Domestic O ces

Refer to page 23

（End of FY）（Oices）

0 500 1,000 1,500 2,000 2,500

11 10 09 08 07 06 05 04 03 02

（End of FY）（Institutions）

Note: Shinkin Banks include Shinkin Banks and Shinkin Central Bank. Source: Japan Securities Dealers Association

0 50 100 150 200 250

11 10 09 08 07 06 05 04 03 02

Second-tier Regional Banks Non-Life Insurance Companies Regional Banks

Life Insurance Companies City Banks and Trust Banks

Shinkin Banks Other

Special Members egistered inancial Institutions by Category

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Stock Market

2

Stock Market

1 Primary Market

　In 2011, 50 companies went public on the Tokyo Stock Ex-change, including the 1st and 2nd Sections and the Mothers mar-ket, increasing year on year for the second consecutive year. Dur-ing the i rst half, unlisted companies waitDur-ing for the proper timDur-ing to go public because of general sense of uncertainty in the market about the outlook for corporate performances arising from the ma-jor earthquake disaster and concern about public i nance in Europe. As a result, there was little sense of recovery in the initial public of ering (IPO) market. In the second half, the market turned around after getting a feel for the impact of those concerns and growing interest among investors for high growth potential IPOs, such as social network services (SNS) related issues. Signs of a recovery in the number of newly listing companies began to emerge. The proportion of new listings by companies in the category of informa-tion and telecommunicainforma-tions businesses increased, accounting for 11 companies. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0 25 50 75 100 125 150 175 11 10 09 08 07 06 05 04 03 02

Number of Newly Listed Companies (left scale) IPO Amounts (right scale)

umber of e ly isted Companies and IPO mounts

（CY）

（Companies）（Trillion yen）

Notes: 1. IPOs include public oferings made when foreign companies list on a Japanese exchange. 2. The igures for the number of new listed companies are for the First and Second Sections and the Mothers market of the TSE. Figures for other domestic exchanges are not included.

Source: Tokyo Stock Exchange, Japan Securities Dealers Association

Refer to page 24

　With the market struggling against the backdrop of the European sovereign debt problem, the l ooding in Thailand, the strong yen, and other negative factors, a limited number of companies were seeking to raise capital in the stock market in 2011. Looking at the total capital raised, equity i nancing amounted to ¥1,014.0 bil-lion in i scal 2011, compared with ¥3,320.0 bilbil-lion in i scal 2010. Another reason for the low level of equity i nancing was the decline in large-scale capital increases to strengthen capital bases by

ma-jor banks and trust banks seen during the period from 2009 to 2010.

（Trillion yen）

Public oferings Rights oferings Third-party allotments and others

（CY） Notes: 1. Third party allotments include private placements.

2. Up to the iscal year ended March 2007 IPOs made by newly listed companies were not included in public oferings.

Sources: Tokyo Stock Exchange, Osaka Securities Exchange, Jasdaq Securities Exchange

0 1 2 3 4 5 6 7 11 10 09 08 07 06 05 04 03 02

E uity inancing paid in capital increase by Corporations

Refer to page 24

2 Secondary Market

　In overview, the stock market in 2011 can be characterized as moving upward in the i rst quarter on expectations of a recovery in the economy, then collapsing after the March 11 Great East Japan Earthquake disaster, then moving within a tight range during the second quarter, and following a downward trend in the last two quarters.

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Stock Market

　In the second quarter of 2011, the stock index moved within a range of ¥9,300 to ¥10,000. On May 2, it broke through to ¥10,017, but after a while was back down to around ¥9,500. When the process of buying back into the market after the sharp drop in the wake of the major earthquake disaster ended, a sense of lack of direction developed because of the continued uncertainty about corporate performances and where the economy was headed. With a certain amount of doubt remaining in the market because of the slow recovery of supply chains and other factors, the market struggled upward with little success.

　In the third quarter, particularly during September, the market continued to hit successive annual lows. In the United States, August employment figures showed that non-agricultural sector employment had not grown from the previous month and concern about an economic slowdown was heightening. In addition, the market got tired of the uncertainty over the European sovereign debt problem after such incidents as the European Union and the International Monetary Fund (IMF) ceasing their inspections regarding providing Greece assistance. This sentiment resulted in the market falling than the i rst annual low of ¥8,605 recorded on March 15 after the major earthquake disaster, to ¥8,590 on September 6. Furthermore, the G7 finance ministers and central bank governors met in France on September 12, 2011, agreeing to cooperate in measures to deal with the slowdown in the global economy. However, because no new measures were introduced, the crisis in Greece was seen as worsening, resulting in further depreciation in the Euro and a sell of of export-related stocks in Japan. On September 14, the yen against the dollar strengthened to ¥76 and against the Euro to ¥104 in currency markets. Consequently, the stock index fell to a new low for the year. And on September 26 the market declined to its lowest level since April 2009.

　The bear market continued in the fourth quarter as well, amid concern over the jump in the yield on Italian sovereign debt and a growing mistrust of corporate governance in Japanese corporations after the Olympus scandal, which resulted in the companyʼ s stock being designated as a supervised issue by the TSE. On November 25, the market slipped to ¥8,135 at one point. However, it rebounded on a positive monitoring report on aid support for Italy by the IMF and news of the robust Christmas shopping season in the United States, ending the year at ¥8,455 on December 30.

（CY）（Trillion yen）

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

11 10 09 08 07 06 05 04 03 02

Daily verage Stock Trading Value of TSE st Section

Source: Tokyo Stock Exchange

Refer to page 24

（CY）（Yen）

Source: Nihon eizai Shimbun

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000

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Public and Corporate Bond Market

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Public and Corporate Bond Market

1 Primary Market

　In 2011, public and corporate bond issuance in Japan decreased ¥5.1 trillion, or 2.5%, from 2010, to ¥193.3 trillion. Accounting for the largest share of the market, JGB issuance totaled ¥164.0 tril-lion, remaining almost the same as last year. Among general bond issuance other than JGBs, municipal bonds amounted to ¥6,654.9 billion compared with ¥7,608.1 billion in 2010; Government-guar-anteed bonds were ¥3,153.4 billion compared with ¥4,540.1 bil-lion last year; Fiscal Investment and Loan Program (FILP) agency bonds totaled ¥5,647.4 billion compared with ¥4,998.9 billion the year before; and straight corporate bonds were ¥8,483.5 billion compared with ¥9,678.9 billion last year. Overall, bond issuance in this category declined in 2011 except for FILP agency bonds. 　Looking at corporate bond issuance i gures for April each year, a total of ¥1,212.0 billion was issued during April 2010. In compari-son, issuance dropped more than 50% to ¥515.4 billion in April 2011. Because of the successive cancellation of planned issues in the wake of the March 2011 major earthquake disaster and the Fukushima nuclear plant accident. Issuance continued to fall year on year even after that period with the exception of September 2011. Some of the reasons behind this trend are that electric pow-er company bond issuance has yet to make a full-scale recovpow-ery and corporate demand for capital remains low.

0 2 4 6 8 10 12 14

11 10 09 08 07 06 05 04 03 02

Corporate Bond inancing

Notes: 1. Straight Corporate Bonds include asset backed bonds.

2. Following the revision of the Commercial Code in 2002, Convertible Bonds were renamed Convertible-type Bonds with Subscription Rights. Source: Japan Securities Dealers Association

Refer to page 25

Straight Corporate Bonds

Convertible-type Bonds with Subscription Rights

（CY）（Trillion yen）

Composition of Bond Issuance

Notes: 1. Excluding private placement municipal bonds, private placement special bonds and private placement bonds.

2. Straight Corporate Bonds include asset backed bonds. Source: Japan Securities Dealers Association

JGBs Municipal Bonds Gov.-guaranteed Bonds

FILP Agency Bonds Straight Corporate Bonds Others

Refer to page 25 3.4

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Public and Corporate Bond Market

2 Secondary Market

　In overview, in 2011 the long-term interest rate moved slightly upward in the i rst quarter amid expectations of improvement in the economy, but slid downward in the second quarter following the de-cline in rates overseas and other factors. The dede-cline continued through July and August, then moved in a tight 1% range through the third and fourth quarters.

　In greater detail, during the i rst quarter of 2011, the long-term interest rate climbed higher in anticipation of the Japanese econo-my breaking out of a lull. After the March 11 major earthquake di-saster, however, the Nikkei 225 Stock Average plunged to 8,200. Capital l owed into the bond market, driving the long-term interest rate, which had been testing the 1.3% mark, down to 1.145% at one point. The rate then followed the movement in the U.S. long-term interest rate at around 1.2%.

　In the second quarter, a variety of factors combined to put up-ward pressure on the long-term interest rate. Entering the new i s-cal year, the market observed the increase in JGB issuance to fund recovery and restoration after the major earthquake disaster, long-term interest rates were rising overseas, and the central banks of Europe raised their rates—all these factors created a sense of rates climbing in future. Entering May, the U.S. long-term rate was around 3.3%, but sunk suddenly, falling to the 3% level by the end of the month. The Greek sovereign debt problem caused a l ight to quality that sent yields on German government bonds tumbling. Ja-panʼ s long-term interest rate also declined, falling to 1.105% at one point on May 16.

　In the third quarter, the drop in rates in July and August stood out. National debt problems in the United States and Europe fueled a continued l ight to quality, resulting in capital l owing into Japa-nese and German government bonds. Incidents included the raising of the national debt ceiling in the United States and the sell of in Europe of Italian government bonds, which had previously been considered safe.

　The long-term interest rate in Japan seesawed back and forth throughout the fourth quarter. After falling below the 1% mark, fear of higher bond prices heightened, and the Japanese market inter-est rates followed the European rates upward at one point. Howev-er, after the long-term interest rate had risen, there was a robust round of purchasing by pension plans, life insurance companies, and other investors.

（CY）

（%）

07 08 09 10 11

Sources: Bank of Japan, Japan Bond Trading Co., Ltd.

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Call Rates (uncollateralized overnight, left scale)

Simple Yield of Newly Issued 10-year JGB (daily average, right scale)

0.0 0.5 1.0 1.5 2.0 2.5

ong term and Short term Interest ates

（%）

Note: Short-term JGBs are the total of inancial bills, treasury bills and Treasury Discount Bills (since 2009).

Source: Japan Securities Dealers Association Others

Super-long-term, Long-term, Medium-term JGBs Short-term JGBs

0 20 40 60 80 100 120 140

11 10 09 08 07 06 05 04 03 02

OTC Bond Trading including epos

Refer to page 26

（CY）（Hundred

(14)

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Investment Trusts

4

Investment Trusts

　Among publicly offered contractual-type securities investment trusts, net assets of stock investment trusts decreased by ¥5,702.5 billion, to ¥46,761.9 billion. Net assets of bond invest-ment trusts slid ¥489.5 billion, to ¥8,536.5 billion. Net assets of MMFs declined ¥200.5 billion year on year, to ¥2,028.9 billion.

（End of CY）（Trillion yen）（Trillion yen）

Note: Initial Fund Amount is the sum total of publicly ofered contractual-type securities investment trusts issued during the year.

Source: The Investment Trusts Association

0 20 40 60 80 100

11 10 09 08 07 06 05 04 03 02

Bond Investment Trusts Initial Fund Amount（right scale） Stock Investment Trusts

Money Management Funds

0 20 40 60 80 100

et ssets eld in Publicly O ered Contractual type Securities Investment Trusts

Refer to page 26

　By type of publicly offered contractual-type stock investment trusts, net assets of unit-type trusts fell to ¥881.3 billion, drop-ping ¥384.6 billion from the previous year. Net assets held in open type trusts (excluding ETFs) declined ¥5,436.0 billion, to ¥43,152.0 billion. ETFs increased ¥118.1 billion, to ¥2,728.5 bil-lion.

　Among private placement contractual-type securities investment trusts, net assets of stock investment trusts decreased ¥1,977.2 billion, to ¥27,934.7 billion. Net assets of bond investment trusts slipped ¥109.8 billion, to ¥604.6 billion.

　At the end of 2011, the net assets of investment trusts amounted to ¥89,979.8 billion, falling from ¥98,255.5 billion last year. Initial fund amount fell to ¥59,501.1 trillion from ¥61,698.8 trillion last year.

Note: Initial Fund Amount is the sum total of all investment trusts issued during the year.

0 20 40 60 80 100 120

11 10 09 08 07 06 05 04 03 02

Real-estate Investment Trusts Initial Fund Amount（right scale） Publicly Ofered Investment Trusts

Private Placement Investment Trusts

0 20 40 60 80 100

et ssets eld in Investment Trusts

(15)

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Investment Trusts

　Looking at the composition of household holdings in investment trusts, the balance of net assets held at the end of 2010 was ¥61.846.2 billion. At March 31, 2011, the balance had risen to ¥63.635.6 billion and at June 30, 2011, to ¥64.161.2 billion, for an overall increase of ¥2.315.0 billion from the end of 2010. By the end of September 2011, however, the balance had fallen to ¥56.759.0 billion and further to ¥56.156.2 billion by December 31, 2011. In terms of capital flows, there was a net inflow of ¥867.1 billion in the i rst quarter of 2011, of ¥2,039.1 billion in the second quarter, and of ¥876.2 billion in the third quarter. There was a net outl ow of capital in the fourth quarter of ¥501.0 billion. 　The followings are the popularity of individual types of investment trust products.

　Real-estate investment trusts (REITs) and foreign currency de-posit option investment trusts were the most popular in the i rst quarter of 2011. Directly after the major earthquake disaster, there was a movement of funds out of these products, but funds later began to l ow back in, resulting in only a temporary decline. In the second quarter, REITs of ering high return income dividends were the most targeted by investors. The l ow of capital into gold-related investment trusts continued.

　In the second half of 2011, the slowdown in the global economy, European sovereign debt crisis, and strong yen created a backlash in the market, which was also rel ected in the choices of investors. Some REITs that up to that point had enjoyed great popularity be-cause of their high income dividends began to lower their dividends and see movement out of their funds. Instead, Nikkei 225- and Topics-linked funds gained popularity. The previously popular for-eign currency deposit option investment trusts also experienced a change in fortunes. Up to mid-2011, these funds had enjoyed growth driven by the Brazilian real. However, against the backdrop of the sovereign debt crisis in Europe, global investors began to move out of emerging markets, causing the depreciation of the Brazilian real, and in turn movement of funds out of foreign curren-cy deposit option investment trusts. In addition, in the l exible for-eign currency deposit funds, investors began to shift into Austra-lian dollars. The increase in the AustraAustra-lian dollarʼ s share of these funds is thought to be the result of Australiaʼ s position as a de-veloped, natural resource-rich nation that has no record of currency restrictions compared with Brazilʼ s record of frequent imposition of currency restrictions.

Note: Initial Fund Amount is the sum total of publicly ofered contractual-type stock investment trusts issued during the year.

0 10 20 30 40 50 60 70 11 10 09 08 07 06 05 04 03 02

Open Type (excluding ETFs) Initial Fund Amount（right scale） Unit Type ETFs 0 5 10 15 20 25 30 35 40

et ssets eld in Publicly O ered Contractual type Stock Investment Trusts

Refer to page 27

Note: Initial Fund Amount is the sum total of privately placed contractual-type securities investment trusts issued during the year.

0 5 10 15 20 25 30 35 40 11 10 09 08 07 06 05 04 03 02

Bond Investment Trusts Stock Investment Trusts

Initial Fund Amount（right scale）

0 2 4 6 8 10 12 14 16

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Investor Trends

5

Investor Trends

1 Trends by Investor Type

　By type of institutional investors, life and non-life insurance com-panies and pension funds withdrew investments in stocks and oth-er equities by ¥459.0 billion year on year. The decline is thought to be the result of life and non-life insurance companies selling off stocks because of stricter i nancial soundness standards institut-ed in i scal 2011. Facing stricter capital standards, life and non-life insurance companies reduced their equity holdings because of the risk that large equity holdings could lead to a decline in their i -nancial soundness. Major life and non-life insurance companies that were holding corporate stocks from a marketing advantage point of view also have changed policy and are reducing their hold-ings. The backdrop to these movements within the i nancial indus-try is stricter capital adequacy standards. Life and non-life insur-ance companies had stricter solvency margin (capacity to fulfill claim obligations) standards, which are used to judge financial soundness, introduced in the i scal year under review. For example, the new standards estimate the price l uctuation risk of Japanese stocks to be twice as large as previously. The larger the equity holdings of insurance companies, the more their solvency margins will drop.

　Net investment in securities other than stocks jumped ¥5,807.0 billion year on year, to ¥9,281.2 billion. Of that net amount, invest-ment in JGBs was ¥11,154.7 billion. Increases in industrial bonds and investment trusts amounted to ¥923.9 billion and ¥718.4 bil-lion, respectively. Looking at trading trends, life and non-life insur-ance companies were net purchasers of JGBs in 2011, in the amount of ¥18 trillion. Of that amount, super-long-term bonds ac-counted for ¥10 trillion. Considering public and corporate bond (ex-cluding short-term securities) trading by type of investor, life and non-life insurance companies invested particularly heavily, purchas-ing a net of ¥1,909.6 billion, 2.7 times more than in the previous month and statistically the largest amount since 1998. They also were net purchasers of super-long term bonds, at ¥1,818.6 billion. Life insurance companies appeared to be watching the market, pur-chasing about ¥170.0 billion in January and about ¥600.0 billion in February when super-long-term JGB yield were low. However, as the end of the i scal year rolled around, they purchased bonds ag-gressively in order to raise balances in line with their annual invest-ment plans. Another contributing factor may have been the pur-chase of risk free JBGs in accordance with the stricter international solvency standards.

　Looking at trends of individual investors (household) portfolios, total investments in securities fell ¥2,856.0 billion from fiscal 2010, to ¥430.0 billion.

　By category, the amount invested in securities other than stocks fell sharply, slipping ¥2,757.9 billion to minus ¥1,118.4 billion. 　Investment in stocks and other equities climbed ¥141.8 billion from last year, to ¥298.8 billion, while investments in foreign secu-rities declined ¥239.9 billion, to ¥1,249.6 billion.

Source: Bank of Japan （FY）（Trillion yen）

Securities Other than Stocks Foreign Securities

Stocks and Other Equities

-5 0 5 10 15

11 10

09 08

07

Investments by Individual Investors ousehold

Refer to page 27

（FY）（Trillion yen）

Securities Other than Stocks Foreign Securities

Stocks and Other Equities

-5 0 5 10 15

11 10

09 08

07

Investments by Institutional Investors Insurance Companies and Pension unds

Refer to page 27

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Investor Trends

2 Household Financial Assets

　Looking at the trends in individual investors portfolios, total in-vestments in securities in fiscal 2011 increased ¥11 trillion, or 0.7%, from fiscal 2010, to ¥1,513.3 trillion. The investment cli-mate remained severe during the year in review, with the market value of household i nancial assets declining ¥8 trillion against the backdrop of depressed stock prices, the strong yen, and other fac-tors. Nevertheless, the positive impact of the l ow of new capital into this asset class supported an overall increase on a i scal year-end basis for the third consecutive year.

　Looking at a breakdown, stocks and other equities contracted ¥1.7 trillion, or 1.8% year on year, to ¥97.7 trillion while invest-ment trusts fell ¥2.8 trillion, or 4.4% from last year, to ¥60.8 tril-lion. Both these categories placed downward pressure on the bal-ance of household i nancial assets. On the other hand, cash and deposits expanded ¥18.7 trillion, or 2.3%, to ¥835.0 trillion, con-tinuing to rise from a year earlier to post a record high on a year-end basis. Furthermore, the breakdown of cash and deposits showed a trend toward liquid deposits. In the wake of the major earthquake disaster there has been a heightened preference for liquid deposits. Given the low interest rate on time deposits and other factors, there has continued to be a notable l ow of money into ordinary accounts and other liquid deposits. In addition, the l ow of funds into foreign securities continued, with foreign securi-ties becoming the main destination for the l ow of household i nan-cial assets during the i scal year under review among all major as-set classes. As a result, investment in foreign securities rose ¥1.2 trillion, or 11.1% year on year, to a historical high. The flow of household financial assets into foreign securities underscore a trend among households toward looking at a diverse selection of assets, including foreign securities, when they are prepared to take some risk in choosing where to invest.

　In terms of the composition of household financial assets, the proportions of stocks and other equities and investment trusts de-clined to 6.5% and 4.0%, respectively, rel ecting the drop in stock prices. In contrast, cash and deposits further increased its share of overall household financial assets to 55.2%. This result indi-cates that households still maintain a strong preference for low risk, secure assets when investing.

（End of FY）（%）

Note: Bonds include trust beneiciary rights. Source: Bank of Japan

Stocks and Other Equities Other

Bonds

Insurance and Pension Reserves Cash and Deposits

Investment Trusts

0 10 20 30 40 50 60 70 80 90 100

11 10

09 08

07

Composition of ousehold inancial ssets

Refer to page 28

（End of FY） Note: Bonds include trust beneiciary rights.

Source: Bank of Japan

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

11 10

09 08

07

Stocks and Other Equities Other

Bonds

Insurance and Pension Reserves Cash and Deposits

Investment Trusts

ousehold inancial ssets

Refer to page 28

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Investor Trends

3 Stock Investment by Investor Type

　In 2011, foreign investors held the large share of Japanese stockholdings, at 26.3%. Among other investor categories, business corporations and individuals accounted for 21.6% and 20.4 % (21.2% and 20.3% for the fiscal 2010) respectively, remaining at the same level as in the previous year. Looking at the stockholding amounts by type of investors, total amount fell ¥2.4 trillion yen to ¥308.3 trillion, of which foreigners holding amount declined ¥2 trillion from the previous year, to ¥81.0 trillion. Among other investor categories, bussiness corporations holdings rose ¥0.6 trillion to ¥66.6 trillion and individual holdings fell ¥0.2 trillion to ¥62.8 trillion.

　Looking at the net buyer and seller trends, in the irst quarter of 2011, foreign investors were mainly buying Japanese stocks in anticipation of a recovery in the economy, resulting in their net purchase of ¥2,984.5 billion. However, in the second quarter, foreign investors steadily became sellers and foreign investors were net sellers in the second half.

　In the first quarter, investment funds flowed into Japanese stocks, which usually react to global trends with a slight time lag compared with other developed countries. The inflow occurred against the backdrop of quantitative easing in the United States and expectations of a recovery in Japanese corporate performances. As concern about an economic slowdown in the United States and other countries dissipated, investor sentiment turned positive, and foreign investors began buying Japanese stock with the expectation that corporate performances would recover. Another view for the inflow of investment is that Japan was on the receiving end of a flight of investment money from emerging countries because of the fear of inlation.

　In the second quarter, however, concern about European public inances deepened. Investors began to curtail their investments in stocks because of their risk asset nature, a trend that spread around the world. Consequently, foreign investors began selling increasing amounts of Japanese stocks. One aspect of the inlows in the first quarter was that the larger amounts of investment money created by monetary easing in developed countries started to move increasingly into Japanʼ s market because it moves slightly behind overseas markets. Therefore, after the United States announced the end to the second round of quantitative easing in the last part of April 2011, the purchases of Japanese stock by foreign investors began to steadily taper of.

　In the third quarter, the net sales position of Japanese stock by foreign investors during the July to September period amounted to ¥1.65 trillion. Underpinning the outflow of funds was the intensifying seriousness of the European sovereign debt problem and the heightened concern that its negative impact on the global economy could not be avoided. The mounting turmoil in global markets prompted a growing movement among investors to reduce risk assets in preparation for deterioration in the economy. There was also uncertainty about the direction of Japanese corporate performances.

　In the fourth quarter, foreign investors were net sellers to the tune of ¥381.3 billion, resulting in an overall net sales amount for

Notes: 1. Governments includes the government and municipal governments.

2. Financial Institutions do not include Pension Trusts, Investment Trusts, and Insurance Companies. 3. Figures include all listed issues, excluding foreign issues.

4. The Pension Trusts igure aggregates managed portion of pension funds such as employees' pension fund handled by banks that carry out trust business, but excludes managed public pension fund assets. 5. Proprietary trading by listed companies is included in the category to which those companies belong to. 6. In April 2010, the Jasdaq Securities Exchange merged with the Osaka Securities Exchange, with the Jasdaq and NEO markets becoming part of the OSE market. Consequently, starting with iscal 2009, the igures for the two markets (Jasdaq and NEO) have been combined. In addition, retroactive adjustments have been made to available igures back to iscal 2004.

0 10 20 30 40 50 60 70 80 90 100 11 10 09 08 07

Stockholdings by Type of Investors market value basis

Financial Institutions Insurance Companies Securities Firms Governments Investment Trusts Foreigners Individuals Pension Trusts Business Corporations

Refer to page 29

（End of FY）（Trillion yen）

Notes: 1. Governments includes the government and municipal governments.

2. Financial Institutions do not include Pension Trusts, Investment Trusts, and Insurance Companies. 3. Figures include all listed issues, excluding foreign issues.

4. The Pension Trusts igure aggregates managed portion of pension funds such as employees' pension fund handled by banks that carry out trust business, but excludes managed public pension fund assets. 5. Proprietary trading by listed companies is included in the category to which those companies belong to. 6. In April 2010, the Jasdaq Securities Exchange merged with the Osaka Securities Exchange, with the Jasdaq and NEO markets becoming part of the OSE market. Consequently, starting with iscal 2009, the igures for the two markets (Jasdaq and NEO) have been combined. In addition, retroactive adjustments have been made to available igures back to iscal 2004.

0 50 100 150 200 250 300 350 400 450 11 10 09 08 07

mount of Stockholdings by Type of Investors market value basis

Financial Institutions Insurance Companies Securities Firms Governments Investment Trusts Foreigners Individuals Pension Trusts Business Corporations

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Investor Trends

Notes: 1. Figures are aggregations of transaction volume by participants with capital amounts of ¥3 billion or more. 2. Figures are sums of Tokyo Stock Exchange, Osaka Securities Exchange, and Nagoya Stock Exchange performances. 3. Domestic common stocks are subject to aggregation, but preferred stocks are excluded.

4. Of-loor transactions are included.

5. The percentage of each investor type is the composition ratio to the total number of shares sold and purchased (excluding those by Securities Firms (commissioned) and by Other Legal Entities).

6. Securities Firmsʼ igures include only proprietary trading by securities irms. Source: Tokyo Stock Exchange

0 10 20 30 40 50 60 70 80 90 100

11 10

09 08

07 06

05 04

03 02

Composition of Transaction Volume by Type of Investor

Refer to page 30

Foreigners Trust banks

Investment trusts Other inancial institutions

Business corporations Individuals

Banks Securities Firms

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Trends of Japanese Economy

-5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0

11 10

09 08

07

Public Demand Real GDP Net Exports

Private Demand

eal GDP Gro th ate

（%）

（CY, Quarterly）

Refer to page 31

Notes: 1. Figures are seasonally adjusted.

2. Real GDP igures are comparisons with the previous quarter; demand category igures are contribution ratios.

Source: Cabinet Oice

（FY）

（Trillion yen）（%）

Note: The iscal 2010 igures for current proit and current proit to sales ratio are preliminary report igures.

Source: Ministry of Finance

0 10 20 30 40 50 60

11 10

09 08

07

Current Proits (left scale)

Current Proit to Sales Ratio (right scale)

1.0 1.5 2.0 2.5 3.0 3.5 4.0

Corporate Pro ts all industries all scales of businesses

Refer to page 32

1 Trends of Economy

　Entering 2011, Japanʼ s economy showed signs of escaping from a lull that occurred after it hit bottom in the i rst quarter of 2009 and resuming its recovery. Supported by the momentum of economic recovery worldwide, Japanʼ s industrial production index rose for the fourth consecutive month. Then, the major earthquake disaster struck in March. The disaster damaged factories and equipment, caused production levels to drop substantially because of electric power shortages, and dampened personal consumption because of shortages of goods and self-imposed consumption re-straint among the public. During the second quarter, domestic de-mand i nally began to recover, but external dede-mand was shackled, resulting in the real gross domestic product (GDP) falling for the second quarter in a row.

　There are thought to be several reasons behind the sharp fall in overseas demand in the second quarter. The major earthquake di-saster did spike an increase in domestic demand. There was a temporary increase in demand for food and beverages, heavy elec-trical equipment, and other goods. And there were increased im-ports of oil and gas to fuel the thermal electric power generation plants being substituted for the shutdown nuclear power plants. While deisaster-oriented production decline improved, overseas de-mand sharpy fell in the second quarter, exports were stagnant be-cause of the slowdown in overseas economies. Consequently, the trade balance fell into the red as did the services account because of the decline in tourist business against the backdrop of the un-certainty in the wake of the major disaster and the strong yen. 　In the third quarter, external demand also made a recovery after its sudden drop against the backdrop of the post-disaster re-build-ing of the supply chain that took place over the summer. Many de-mand categories contributed positively to real GDP, resulting in it rising for the i rst time in four quarters.

　However, real GDP growth was strongly affected by the major earthquake disaster on an annual basis, coming in at minus 0.8% for 2011.

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Trends of Japanese Economy

2 Employment Conditions

　Although employment conditions continued to suffer from the harsh business environment in 2011, the unemployment rate and the job-of ers to seekers ratio showed some signs of improvement, demonstrating a mild but positive recovery trend.

　The unemployment rate stayed in the 4% range throughout the year, and ended the year down 0.5% compared with 2010, at 4.6%, posting a little improvement.

　The job-of ers to seekers ratio also was in a mild but positive up-swing, rising from 0.52 times to 0.65 times. The 0.13 point annual increase suggested a slight improvement in the job demand and supply balance.

（CY）

（%）（Ratio (Times)）

Note: Data is annual average (seasonally adjusted).

Sources: Ministry of Internal Afairs and Communications, Ministry of Health, Labour and Welfare

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

11 10

09 08

07

Unemployment Rate (left scale)

Job-ofers to Seekers Ratio (excluding new school graduates but including part-time workers, right scale)

0.0 0.2 0.4 0.6 0.8 1.0 1.2

Employment Conditions

Refer to page 32

　Looking at a breakdown of the employment i gure, there was a marked increase in employment in the construction industry. A fac-tor in the improved employment conditions previously mentioned was the sharp increase in public works construction arising from the full-scale start to recovery and restoration operations for the major earthquake disaster. However, compared with the improve-ment in the job-of ers to seekers ratio, the improveimprove-ment in the un-employment rate was slower paced. One of the underlying causes of this dif erence is thought to be a mismatch of job seekers and job openings. Moreover, in the construction industry where there has been a large increase in employment related to the major di-saster, the volume of work by region has varied dramatically de-pending on recovery and restoration capital investment, resulting

in a regional mismatch of job seekers and job openings.

　While employment conditions remain in a recovery trend, there are many concerning factors regarding the future. Rel ecting the slump in production driven by low personal consumption, it seems highly likely that the decline in employment in the manufacturing industry will continue. In addition, it is also possible that the growth in employment will peak along with the end to recovery and restora-tion demand.

3 Price Indices

　In 2011, the Corporate Goods Price Index (CGPI) increased 1.5% from a year earlier, to 101.5 (2010 as base value), rising for the i rst time in three years. Higher crude oil prices driven by greater demand primarily from Asia were thought to be behind the increase in CGPI.

　The Consumer Price Index (CPI; excluding fresh produce) had been in a continuously declining trend since 2009 amid a relax-ation in the demand-supply balance of the overall economy. Howev-er, higher electricity rates and gasoline prices, an increase in ciga-rette prices because of a tax hike, and other factors put the brakes on the decline in consumer prices. On an annual basis, the CPI was down 0.2% year on year, at 99.8 (2010 as base value), hovering at almost the same level as in the previous year.

Note: Data is annual average (2010 basis)

Sources: Ministry of Internal Afairs and Communications, Bank of Japan （CY）（%）

Consumer Price Index (excluding fresh food) Corporate Goods Price Index (inal consumer goods)

-6.0 -4.0 -2.0 0.0 2.0 4.0 6.0

11 10

09 08

07

Consumer Price and Corporate Goods Price Indices

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20

Statistical Data

Current Proi ts, Net Income/ Loss and ROE of Member Securities Firms

FY ended 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 2012.3 Current Proi ts/

Losses

（Billion yen） 135 793 758 1,699 1,015 657 －243 333 87 217 Net Income

（Billion yen）－169 508 483 1,136 588 －145 －346 202 －270 －25 ROE

(%) －3.5 10.1 8.7 17.7 7.9 －1.9 －5.0 3.1 －4.3 －0.5 Notes: 1. Securities i rms that were not in business as of the end of March in each year are excluded.

2. ROE is after-tax proi ts divided by average stockholders’ equity. Source: Japan Securities Dealers Association

Net Income/ Loss by Type of Member Securities Firms

（Billion yen）

FY ended 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 2012.3 Major Firms 53 231 214 463 332 －267 －110 92 －69 －1

Foreign Firms －7 75 91 344 71 －8 －76 22 5 －3

Other Domestic

Firms －215 201 177 328 183 130 －159 87 －206 －20 Notes: 1. Securities i rms that were not in business as of the end of March in each year are excluded.

2. Major securities i rms: SMBC Nikko Securities Inc., Daiwa Securities, Co., Ltd., Nomura Securities Co., Ltd., and other securities i rms capitalized at a hun-dred billion yen or more (Up to i scal 2010 ended March 2011, Daiwa Securities Capital Markets Co. Ltd., was included in the major securities i rms.). Source: Japan Securities Dealers Association

ROE by Type of Member Securities Firms

（％）

FY ended 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 2012.3 Major Firms 2.7 11.0 9.3 18.2 10.9 －9.7 －4.4 3.5 －2.5 －0.1 Foreign Firms －0.9 9.4 10.8 38.2 7.6 －1.2 －16.6 5.5 1.5 －1.2 Other Domestic

Firms －10.2 9.4 7.4 11.0 5.2 3.2 －4.1 2.5 －6.7 －0.7 Notes: 1. Securities i rms that were not in business as of the end of March in each year are excluded.

2. ROE is after-tax proi ts divided by average stockholders’equity.

3. Major securities i rms: SMBC Nikko Securities Inc., Daiwa Securities, Co., Ltd., Nomura Securities Co., Ltd., and other securities i rms capitalized at a hun-dred billion yen or more (Up to i scal 2010 ended March 2011, Daiwa Securities Capital Markets Co. Ltd., was included in the major securities i rms.). Source: Japan Securities Dealers Association

Overall Condition of Securities Industry

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Statistical Data

Operating Revenues of Member Securities Firm

（％）

FY 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 2012.3 Commissions 61.6 62.1 65.6 65.1 63.1 61.8 56.9 62.9 65.0 60.3 Brokerage commissions 21.8 27.0 28.0 28.5 22.2 19.6 19.0 16.3 16.9 14.4

Underwriting and

secondary commissions 5.4 6.0 6.4 5.0 4.6 2.6 2.9 6.9 5.0 2.8 Subscription and

distribution commissions 6.0 6.3 6.7 7.2 8.9 8.2 7.0 12.9 15.2 15.3 Other commissions 28.5 22.9 24.5 24.4 27.4 31.4 28.1 26.8 27.9 27.8 Trading gain/loss 23.0 26.4 21.3 22.0 18.3 12.6 13.8 23.8 18.5 23.5 Financial income 15.2 11.2 12.8 12.7 18.1 25.1 27.2 12.3 14.7 15.0 Others 0.2 0.2 0.3 0.3 0.5 0.5 2.0 0.9 1.8 1.2 Operating revenues 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Note: Securities companies that were not in business at March 31 were excluded in each i scal year.

Operating Expenses of Member Securities Firms

（Billion yen）

FY ended 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 2012.3 Selling and General

Administration Costs 2,040 2,221 2,319 2,793 3,043 3,123 2,761 2,773 2,618 2,286 T r a n s a c t i o n

Expenses 328 379 422 536 586 581 523 502 497 400

Employment Cost 972 1,096 1,105 1,345 1,431 1,390 1,122 1,202 1,104 996 Real Estate &

Equipment Costs 278 266 262 265 299 325 319 307 284 256 Data Processing &

Oi ce Supplies Costs 263 270 295 314 365 419 424 413 424 385 Others 197 206 233 331 359 407 371 347 306 248 Financial Expenses 223 285 335 436 646 879 705 268 268 240 Operating Costs 2,263 2,506 2,654 3,230 3,689 4,002 3,467 3,041 2,886 2,526 Note: Securities i rms that were not in business as of the end of March in each year are excluded.

（Billion yen）

FY ended 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 2012.3 Commission 1,469 2,046 2,221 3,195 2,956 2,830 1,797 2,128 1,898 1,634

Brokerage commissions 519 889 948 1,399 1,042 898 599 552 493 390 Underwriting and

secondary of ering

commissions 129 197 216 246 215 120 91 234 145 75

Subscription and

distribution commissions 142 206 228 352 416 375 221 436 444 415

Other 679 754 829 1,198 1,283 1,437 886 906 816 754

Trading Gain 549 871 723 1,078 856 579 435 804 540 636 Financial Revenue 362 369 434 622 847 1,150 860 417 428 406

Others 5 7 9 15 24 23 62 31 53 33

Operating Revenues 2,386 3,294 3,388 4,911 4,686 4,582 3,156 3,381 2,920 2,710 Note: Securities i rms that were not in business as of the end of March in each year are excluded.

Operating Revenues of Member Securities Firms

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Statistical Data

Regular Members (Securities Firms)

End of FY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Regular Members 281 266 267 289 308 317 321 305 293 285

Enrollment 18 8 7 30 33 22 25 10 12 9

Withdrawal 27 23 6 8 14 13 21 26 24 17

Notes: 1. Withdrawal includes the decrease in the number of regular members due to mergers, etc. 2. The companies that withdrew efective March 31 are included in the withdrawal of next iscal year. Source: Japan Securities Dealers Association

Special Members (Registered Financial Institutions) by Category

End of FY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

City Banks 7 7 7 6 6 6 6 6 6 6

Trust Banks 14 14 14 14 14 16 15 14 14 14

Government-ailiated

Financial Institutions 2 2 2 2 2 2 2 3 3 3

Regional Banks 64 64 64 64 64 64 64 64 63 64

Second-tier

Regional Banks 53 50 48 47 46 45 44 42 42 42

Shinkin Banks 38 36 35 37 37 38 39 40 40 40

Life Insurance

Companies 18 17 17 16 16 12 12 12 12 12

Non-Life Insurance

Companies 14 14 13 13 13 10 8 8 5 5

Money Market

Brokers 3 3 3 3 3 3 3 3 3 3

Foreign Banks 4 4 5 9 8 12 15 15 15 14

Securities Finance

Companies 1 1 1 1 1 1 2 3 3 3

Credit Cooperatives 0 0 0 2 2 2 3 3 3 3

Other Banks 4 4 6 5 5 9 10 10 10 10

Total 222 216 215 219 217 220 223 223 219 219

Note: Shinkin Banks include Shinkin Banks and Shinkin Central Bank. Source: Japan Securities Dealers Association

Operating Expenses of Member Securities Firms

（％）

FY 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2011.3 2012.3 Selling and general

administrative costs 90.1 88.6 87.4 86.5 82.5 78.0 79.6 91.2 90.7 90.5 Transaction expenses 14.5 15.1 15.9 16.6 15.9 14.5 15.1 16.5 17.2 15.8 Employment cost 43.0 43.7 41.6 41.6 38.8 34.7 32.4 39.5 38.3 39.4 Real estate &

equipment expenses 12.3 10.6 9.9 8.2 8.1 8.1 9.2 10.1 9.8 10.1 Data processing &

oice supplies costs 11.6 10.8 11.1 9.7 9.9 10.5 12.2 13.6 14.7 15.2 Others 8.7 8.2 8.8 10.2 9.7 10.2 10.7 11.4 10.6 9.8 Financial expenses 9.9 11.4 12.6 13.5 17.5 22.0 20.3 8.8 9.3 9.5 Operating expenses 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Note: Securities companies that were not in business at March 31 were excluded in each iscal year.

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