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Japan cuts the food tax, refuses to borrow for it
Tokyo just cut the tax on your dinner, then handed the finance minister a very specific promise: no deficit bonds, just spending cuts and subsidy claw-backs to cover it.
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Market pulse
Tokyo equities advanced while the 10Y JGB yield nudged lower.
Sourced from Nikkei, JPX, BOJ, MOF - values, not commentary.
TSE Prime investor flows
| Investor | Week ending |
|---|---|
| Foreign net flow | −¥274.9bn |
| Individual net flow | +¥426.5bn |
| Trust-bank net flow | −¥550.0bn |
Japan Exchange Group, investor-type weekly trading value (TSE Prime)
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Japan Bars Deficit Bonds to Fund Its Food Tax Cut
Japan Bars Deficit Bonds to Fund Its Two-Year Food Tax Cut
Japan's cabinet approved a tax reform outline on September 15 that cuts the consumption tax on food and beverages for two years, and the finance minister used the post-cabinet briefing to draw a hard line on how Tokyo will pay for it. The rate cut will be written into a bill for submission to the Diet, and the minister was explicit about the guardrail: the revenue shortfall must be replaced without deficit-covering special bonds, the debt Japan issues specifically to plug budget gaps.
Why it matters: The promise is aimed at bond investors as much as voters. Ruling out deficit bonds forces the government to fund a popular tax cut through spending and revenue reviews rather than fresh borrowing, at a moment when Tokyo is trying to keep long-term Japanese government bond yields anchored.
What to watch: The outline pairs the tax cut with a wider budget-reform framework: a zero-base review of tax special measures, subsidies and non-tax revenue, reviews on both the spending and revenue sides of the ledger, and an outreach push to food and beverage manufacturers, distributors, sellers and related system makers before the bill goes to the Diet. On agriculture, forestry and fisheries, the outline commits to taking utmost care over responses acceptable to farmers, foresters and fishermen as the measure moves forward.
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Boardroom Battles and Buyouts
Bain's Revised Kakaku.com Bid Still Trails Its Rival Unless KDDI Signs Off
Kakaku.com told the Tokyo Stock Exchange on September 17 that the Bain Capital and LINE Yahoo-backed bidder, BCPE Blitz, raised its tender offer to ¥3,597 a share, but that still trails the rival Kamgras 1 bid of ¥3,680. The two offers are mutually exclusive: only one can proceed.
What to watch: A non-tender agreement with KDDI, which would lift Bain's price to ¥3,720, is the one path that could flip the outcome. Kakaku.com's board currently backs the Kamgras 1 offer and stays neutral on whether shareholders should tender.
Keywest Network Crosses 82.88% Stake in Future Corporation After ¥2,451 Tender Offer
Keywest Network's tender offer for Future Corporation closed at ¥2,451 a share, running from July 30 to September 10, with settlement beginning September 17. The buyer group now holds 82.88% of Future Corporation's 95.3 million outstanding shares, financed largely by a ¥106bn loan from Sumitomo Mitsui Banking Corporation secured against the shares themselves.
What to watch: A share consolidation to squeeze out remaining holders is planned for late November or early December, the final step in taking the Tokyo Prime-listed IT consultancy private.
ALPS ALPINE to Sell Its Entire Nippon Seiki Stake Into a ¥9.98bn Buyback
ALPS ALPINE will sell all 3 million Nippon Seiki shares it holds, its entire stake, into Nippon Seiki's own September 18 off-exchange share buyback. Nippon Seiki's board approved the repurchase on September 17, offering to buy up to 3.61 million shares, 6.27% of stock outstanding excluding treasury shares, at ¥2,764 apiece, the same day's closing price, for as much as ¥9.98bn. ALPS ALPINE expects to book roughly ¥5.0bn in special profit if the trade completes as planned.
Zoom out: The sale follows a January 2026 announcement that the two companies dissolved their capital-and-business alliance and moved to a business alliance instead. Exiting the cross-shareholding closes out that unwind.
Air Water Turns Its Accounting Scandal Into a Company-Wide Portfolio Purge
Air Water disclosed on September 17 that it is screening every company in its consolidated group on strategic fit, financial performance, and governance, the concrete version of the group-wide strategy review it promised after an improper accounting case. Businesses judged better suited to a different owner will be transferred promptly, with proceeds funding both extra shareholder payouts and growth investment.
Why it matters: The portfolio review is one of four pillars in Air Water's recurrence-prevention plan, alongside corporate-culture change, governance reform, and rebuilding internal controls, all already underway since the accounting problems surfaced.
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Earnings Scorecard
Torikizoku Owner Slashes Next Year's Profit Target After Shanghai Retreat
Eternal Hospitality Group missed its own profit guidance for the year to July 2026, booked a ¥391mn impairment tied to closing four of seven Shanghai stores, and has now halved next year's operating-profit target while domestic same-store sales keep outperforming.
Mercari's Profit Jumps 36% as Marketplace Growth Returns to Double Digits
Mercari, the Tokyo-listed resale marketplace, posted net profit of ¥35.4bn for the year to June 2026, up 35.6% year on year, as consolidated revenue rose 19.0% to ¥229.3bn and operating profit jumped 57.7% to ¥43.9bn. The company's preferred core operating profit measure, which excludes one-off items, came in at ¥44.1bn, beating the guidance it set at the start of the year.
The number: Marketplace transactions returned to double-digit growth and Mercari's Mercard credit card program passed 6 million cards issued. The company again paid no dividend, reinvesting instead.
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Policy and Data Watch
China's Travel Warning Drags Japan's August Arrivals Down 9.6%, Even as 14 Other Markets Hit Records
Japan's inbound tourism numbers went into reverse in August: the Japan National Tourism Organization estimates 3,098,900 foreign visitors arrived in the month, down 9.6% from a year earlier. Almost the entire shortfall traces back to one market. Chinese arrivals collapsed 59% to 418,000 after Beijing advised its citizens to avoid travel to Japan, an advisory that has now pulled year-to-date Chinese arrivals down 56.7% to 2.9mn.
Why it matters: Fourteen other markets, including South Korea and Taiwan, hit August records, so the headline decline is a China-specific hole, not a broad slowdown, useful context for airlines, hotels, and retailers weighing how much China exposure to hedge.
FSA Moves Securities Penalty Hearings Online, but Keeps Old Safeguards
Japan's Financial Services Agency published an amended Cabinet Office Ordinance on September 16 that rewires how it runs hearings over surcharge payment orders, the administrative penalties for violations of the Financial Instruments and Exchange Act and the Certified Public Accountants Act. The rule takes effect November 30, 2026, and lets respondents and witnesses file records electronically, appear by video and audio link instead of in person, and receive notices by e-mail rather than registered mail.
The catch: In its public-comment responses, the FSA rejected proposals for a mandatory 360-degree camera sweep at the start of remote hearings, leaving how examiners check a witness's surroundings to case-by-case discretion under the new rules.
quick hits
Quick Hits
Japanese Consortium Runs Naphtha Cracker on 85% Ammonia, Matches Existing NOx Levels
Read moreA Japanese consortium ran a naphtha cracking furnace on 85% ammonia fuel by putting its main burners on 100% ammonia while flame-shaping burners stayed on methane off-gas, holding nitrogen-oxide emissions at existing levels, with full ammonia firing and commercial-scale trials still to come.
Synspective Secures ¥20bn From 13 Banks, With Balance-Sheet Covenants Attached
Read moreSynspective's new syndicated loan, arranged by Mizuho Bank and backed by Japan's three megabanks plus ten other lenders, funds satellite manufacturing and launches, but two financial covenants will test the company's net assets and quarterly liquidity over the loan's five-year, three-month term, and Synspective now expects total borrowing costs, reflecting both the larger facility size and higher interest rates than assumed, to run about ¥187mn above its original internal assumption, a figure only partly built into its published guidance for the year to December 2026.
TEPCO Power Grid Signs Five Covenanted Loans, All Due the Same Day in March 2027
Read moreTEPCO Power Grid borrowed under five separate loan agreements this month, and two of them tie lender rights to profit and asset tests at the entire TEPCO Holdings group rather than just the subsidiary itself, with all five loans due on the same day in March 2027.
Shoko Chukin Bank Sells ¥91bn of Treasury Shares to Its Own Small-Business Clients
Read moreJapan's SME policy lender is selling 556.5 million unlisted treasury shares to hundreds of small businesses and cooperatives, with no single buyer topping 1.1%, to fund a pivot into advisory, digital and investment-banking services rather than a stock listing.
Saint Marc pays ¥12.8bn for the Tsurutontan udon chain to chase inbound diners
Read moreSaint Marc Holdings will spend ¥12.8bn in cash to acquire the Tsurutontan udon and washoku business from Osaka's K-Express, a Kato Pleasure Group unit whose operating profit fell by more than half last year, and plans to use the brand's inbound following to expand into major Japanese cities and ASEAN markets before the deal takes effect on December 1, 2026.
Chubu Steel Plate Cuts Profit Guidance as Price Rises Lag Behind Plan
Read moreSlow price pass-through on thick steel plate has pushed Chubu Steel Plate to guide for an ¥800mn first-half operating loss and cut full-year operating-profit guidance by 75% to ¥300mn.
SanBio Targets Just Six Patients for Its ¥72.7mn Brain Therapy This Year
Read moreSanBio's newly launched cell therapy for chronic motor paralysis after traumatic brain injury, priced at ¥72.7mn a treatment, has generated no revenue and no dosed patients four months after its Japanese launch, and the company is now targeting only six cases by the fiscal year-end in January while its cash pile fell ¥2.34bn to ¥12.75bn over the same half-year.
Terra Drone Says Its First Defense Revenue Lands This Autumn
Read moreTerra Drone told investors it landed two Ministry of Defense tenders far faster than the usual three-to-four-year entry timeline and expects its first defense revenue in September or October, while betting that a mandatory domestic-parts rule for flight controllers, batteries, motors and chargers would strengthen its position against foreign suppliers.
Hobonichi Lifts Profit Guidance as Overseas Planner Orders Double
Read moreOverseas wholesale orders for Hobonichi's 2027 planner more than doubled from a year earlier, and that order intake, not confirmed retail sell-through, is why the stationery maker raised its full-year sales and profit forecasts on September 17.
Nissha Completes Half of Its Vietnam Medical-Device Exit, Keeps a 10% Tail Through 2028
Read moreNissha has handed over half its 60% stake in Vietnamese subsidiary USM HEALTHCARE MEDICAL DEVICES FACTORY to a company director, pulling the unit out of consolidation, while the remaining 10% stays on its books for a planned sale between 2027 and 2028, with the resulting gain or loss still under review.