It is buyback announcement season in Japan

Seasons are important in Japan. Right now, on the cusp of spring, it is buyback announcement season. The biggest repurchase so far has been flagged by SoftBank. The controversialtech group plans to spend ¥600 billion ($5.5 billion). The shares have risen 19 per cent over two days. But there is no such thing as a free buyback. A $910 million repurchase announced by Sony yesterday represents an apology for weak numbers. In contrast, SoftBank has reported a 62 per cent jump in operating profits over the first three quarters. A big chunk of earnings consisted, as always, of profits of affiliates that do not pass through SoftBank’s books as cash. The uplift was thanks to a higher valuation for companies in the Vision Fund, such as Uber, WeWork and Didi Chuxing. The record buyback may be an attempt by founder Masayoshi Son to appease investors for increased risks… SoftBank’s market worthbefore the announcement was ¥9 trillion. The group says its holdings are valued at ¥25 trillion and its net debts are ¥4 trillion. But investors do not get sums as badly wrong as “25-4=9”, SoftBank’s vexed summary of the situation. A big buyback has lifted the shares temporarily. Mr Son’s tech bets would have to start paying off big time for the effect to be permanent.
 
Lex.

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