Japan Inc. is seemingly gearing up to increase its international capital interests as the country’s central bank moves away from policies depreciating the value of the yen. Set to meet from 18 to 19 March 2024, the Bank of Japan (BOJ) is expected to hike interest rates to boost the national currency and the feasibility of outbound deals.
Japan Inc. to intensify international mergers and acquisitions
Since the start of March, the yen has strengthened its position by 1% against the US dollar. This reportedly makes foreign acquisitions in sectors such as finance and technology more affordable.
Reuters cited Ashurst partner Natsuko Ogawa, who commented:
An increase in interest rates in Japan may be positive for the yen … and make it easier for Japanese companies that are currently more domestically focused to do outbound deals.
An LSEG report indicated that Japanese companies have spent an estimated $17bn on international acquisitions so far this year, making it the highest foreign investment activity since 2019. According to analysts, this activity occurred in the wake of an 81% surge in value in overseas mergers and acquisitions (M&A) as companies turn their focus away from the local deflationary clime.
Don’t miss out the latest news, subscribe to LeapRate’s newsletter
Based on financial data, Japan’s M&A activity differs sharply from the rest of the Asia-Pacific region, where economic deceleration in China attributed to significant drops in deal-making values.
Reuters also quoted the head of Japan M&A advisory at Barclays, Yuzo Otsuka, who said:
Pressure from behind to make use of cash or return it to shareholders is growing ever stronger.
