At a time when artificial intelligence has been driving market rallies, Japan’s biggest listing in six years is an old-school affair. Shares of Tokyo Metro, the country’s biggest underground railway network, soared as much as 47 per cent in its trading debut on Wednesday giving it a market value of $6.7bn. But investors should not count on the pop turning into a long-term rally.
More than 6.5mn riders take the Tokyo Metro every day, almost double the number of people using the New York City subway. The company operates nine lines and 180 stations. That makes the subway systems company one of Japan’s biggest household names, which helped the deal — oversubscribed more than 15 times — price at the top of an indicative range. Local retail investor interest has been especially high.
A high dividend yield makes Tokyo Metro shares attractive to this investor group. Tokyo Metro’s yield was 3.3 per cent, about a third higher than local peers. Other perks for shareholders holding over a certain number of shares helped too, such as train tickets, toppings at its noodle restaurants and entry to the company’s golf range and museum.