Do Keiretsu (such as Mitsubishi, Mitsui, Sumitomo) still hold significant influence in today's Japanese stock market?

Okay, let's talk about this. If you follow the Japanese stock market or have any interest in the Japanese economy, names like Mitsubishi, Mitsui, and Sumitomo are definitely familiar. So, do these old-school "conglomerates" still count as "big players" in today's Japanese stock market?

The short answer: Their influence remains immense, but the way it works is vastly different from before.

Think of them as a vast, tightly-knit "family".

The Past (Pre-WWII): This family was called a "Zaibatsu". It had an absolute patriarch (a holding company) controlling all the family businesses, from banks to mines, with power highly centralized.
The Present (Post-WWII): This family is now called a "Keiretsu". After WWII, the Americans deemed this "patriarch" system too domineering and dismantled it. But the blood ties between family members remained. While now independent, they still belong to the same circle, supporting each other and presenting a united front.

So, today, when we talk about Mitsubishi, Mitsui, and Sumitomo, we're referring to these "Keiretsu". Their influence is primarily manifested in the following ways:

1. Core Weapon: Cross-Shareholding (Kabushiki Mochiai)

This is key to understanding their influence. Simply put, it's "I buy a bit of your shares, you buy a bit of mine," making each other minor shareholders.

What's the effect? Imagine the Mitsubishi group with Mitsubishi Bank, Mitsubishi Corporation, Mitsubishi Heavy Industries, etc. They hold each other's shares. This forms a huge "friends circle" or "brotherhood".
Impact on the Stock Market:
- Defending against "Barbarians": If an outsider tries a hostile takeover of a company within the Mitsubishi group, other "Mitsubishi-affiliated" companies will oppose it. Because they are shareholders themselves, it's hard for the acquirer to gain enough votes. This makes management control within group companies very stable.
- Stabilizing Stock Prices: These "insider" shareholders won't sell shares impulsively due to short-term price fluctuations; they pursue the long-term stability and development of the entire group, not quick profits. Therefore, the stock prices of these companies are relatively less prone to wild swings.

2. The Invisible Command Center: The "Presidents' Council" (Shachō-kai)

Although there's no "patriarch," the CEOs of the group's core companies meet regularly.

Mitsubishi has the "Friday Club" (Kinyō-kai)
Mitsui has the "Second Thursday Club" (Nimoku-kai)
Sumitomo has the "White Water Club" (Hakusui-kai)

These meetings are like regular family gatherings where information is shared, strategies are coordinated, and major issues are discussed. While not legally binding, consensus reached among the leaders within this circle carries significant weight. This ensures the entire group moves in step on critical matters.

3. The "Iron Triangle" Business Ecosystem

Each group has formed a powerful, internally integrated business loop, typically centered around "Bank + Trading Company + Manufacturing".

Bank (e.g., MUFG Bank, SMBC): The group's "money bag". Provides financial support to internal companies, making financing and loans convenient.
General Trading Company (Sōgō Shōsha) (e.g., Mitsubishi Corporation, Mitsui & Co.): The group's "global intelligence network" and "sales vanguard". They source resources and develop markets worldwide, selling the group's products globally and procuring raw materials from around the world.
Core Manufacturing Companies (e.g., Mitsubishi Heavy Industries, Mitsui Chemicals): The group's "muscle". Responsible for producing everything from cars and ships to chemical materials.

This ecosystem operates internally, with mutual procurement and support. For example, if Mitsubishi Heavy Industries builds a factory, it might get a loan from MUFG Bank, procure foreign equipment and materials through Mitsubishi Corporation, and have the finished products sold overseas by Mitsubishi Corporation. This internal synergy offers advantages outsiders find hard to match.

So, Is This Influence Weakening?

Yes, it's also evolving.

Cross-Shareholding is "Loosening": In recent years, the Japanese government and the Tokyo Stock Exchange have been pushing corporate reforms, demanding companies focus more on shareholder returns. Many foreign investors also criticize this "cliquish" practice as opaque and inefficient. Consequently, many companies are gradually selling off some cross-held shares to use the capital where it's more needed. This "friends circle" bond isn't as unbreakable as before.
Rise of "New Players": Companies like SoftBank, Fast Retailing (Uniqlo's parent), and Keyence, which belong to no traditional Keiretsu, have become significant forces in the stock market through their own powerful innovation and competitiveness. Their existence proves that massive success in Japan is possible without "cliquing up".

Conclusion

So, back to the initial question: Do the Keiretsu still hold significant influence in today's Japanese stock market?

The answer is a definite yes.

They are like the anchor and backbone of the Japanese stock market.

Anchor: Their massive scale and stable cross-shareholding structure provide fundamental stability to the Japanese stock market. Companies within these groups occupy a substantial weighting in the Nikkei 225 index; their performance directly impacts the overall market trend.
Backbone: They form the core of Japan's industrial chain, present almost everywhere from finance, energy, and trade to advanced manufacturing. Investing in Japan's core industries almost inevitably involves these groups.

However, this influence is no longer the absolute, all-controlling power of the past. It has transformed into a more subtle, complex, networked influence. They remain the "big players" of the Japanese stock market, but the landscape now also features increasingly prominent "new players" who don't follow the old rules, collectively shaping the face of today's Japanese stock market.