In today’s briefing:
- Isn’t It Not Strong Enough to Raise ROE by Higher Profit Margin Due to Escape from Deflation?
Isn’t It Not Strong Enough to Raise ROE by Higher Profit Margin Due to Escape from Deflation?
- Since 2020, there has been a divergence between P/B and TOPIX movements, complicating matters for listed companies that have been asked to raise their P/Bs.
- Expectations are high for a rise in ROE, which has a certain correlation with nominal GDP, which is also increasingly correlated with TOPIX, as deflation exits.
- If price pass-through fails, escaping deflation may not lead directly to higher profit margins. If profit margin increase is insufficient, reducing cash on hand is essential to increase ROE.
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