Baby Stocks Face Shakeup in Japan as Suga Turns to Childcare

First mobile phones, then faxes -- now childcare is the latest sector to see a shakeup from the policies of Japan’s prime minister.

A series of stocks offering childcare and education services have seen significant moves in Tokyo in the past days amid reports that Prime Minister Yoshihide Suga aims to form a new “Children’s Agency,” a government department that would oversee and strengthen policy for infants and children in a country with one of the lowest fertility rates in the world.

The policy may become a core feature of the ruling Liberal Democratic Party’s manifesto for a lower house election that must take place this year. The news has boosted a series of previously obscure small-caps, with shares in Youji Corp., which provides physical education classes for young children, almost doubling since the policy was first proposed by junior lawmakers last week. Baby Calendar Co., a newly listed baby-care services provider, rose by its limit for two straight days, before plummeting today.

Baby Stocks Face Shakeup in Japan as Suga Turns to Childcare

“Children are vital to the future of Japan,” Suga said on a TV Tokyo program on April 1. “We must think about the organization that will be best for children amid the declining birthrate.”

Oversight of nurseries, kindergartens and so-called certified child centers is currently spread across different Japanese ministries. Establishing a Children’s Agency “would align with the Suga administration’s goal of breaking down administrative silos,” analysts from Nomura Securities Co. said in an April 2 note. “It would also help the Cabinet play up its ability to roll up its sleeves and work across organizational divides to overcome the structural issues facing Japan.”

In Japan’s bureaucratic system, agencies come just below ministries, and are often formed to help drive policies, such as the Japan Tourism Agency set up in 2008 to promote foreign visitors to the country.

Since coming to power in September, Suga’s policy focus has upended shares in mobile phone operators after he targeted high mobile bills, and lifted a host of companies working on digitalizing Japan’s paper-heavy government.

Whether Suga will survive in office to see the Children’s Agency come to light remains to be seen. Japan’s premier continues to walk a tightrope amid broad public dissatisfaction with his handling of the pandemic, and must also survive a party election with his term as party leader set to expire in September.

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