The total amount of share buybacks in 2023 by companies listed on the Tokyo bourse is likely to come close to last year's record level of 9.2 trillion yen ($66.1 billion), a recent survey by a major securities brokerage firm found.
Since the start of the year, stock buybacks worth 4.6 trillion yen have been announced as of May 16, SMBC Nikko Securities Inc. said.
Market analysts say increased share buybacks are one of the reasons behind the 225-issue Nikkei Stock Average's rally to its 33-year high above the 30,000 mark in May.
The number of listed firms that announced share buyback schemes sharply increased in April and May -- when companies using a business year ending in March release their financial results.
The rises in share buybacks come after the Tokyo Stock Exchange earlier this year requested listed firms to focus more on boosting shareholder returns.
Of over 2,000 major companies listed on the Tokyo bourse, over 370 have announced plans for share buybacks, according to SMBC Nikko Securities.
As more buyback plans are expected, especially among companies closing their books later in the year, the securities firm said the total amount will likely come close to the record high logged in 2022.
Among the companies carrying out aggressive buybacks, trading house Mitsubishi Corp. bought back some 400 billion yen worth of shares, while Honda Motor Co. and mobile carrier KDDI Corp. announced buyback plans of up to 270 billion yen and 300 billion yen, respectively.
The firms saw their stock prices rise following their announcements.
But some experts have expressed caution about the recent rush, noting that using surplus funds for capital investment and strengthening profitability in the medium to long term is equally important for share price performance.
"Companies have changed their mindset following the request from the Tokyo Stock Exchange, which has led to an increase in stock buybacks," said Keiichi Ito, chief quantitative analyst at SMBC Nikko Securities.
Ryohei Yanagi, visiting professor of accounting at Waseda University, said he is "doubtful" about whether recent buyback decisions were made with due consideration.
"(Companies) will be putting the cart before the horse if they are just cashing in on the trend of buybacks," Yanagi said.