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John Wang
in
Finance
January 8 13:23

Japanese companies had a good year - this might soon change

Japanese enterprises had a good year and have made a record amount of deals. Yet the near future might hold a lot of problems, as fears of global recession grow stronger
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In 2019 many Japanese companies left their non-core projects, instead choosing to acquire new prospects abroad. This strategy might have been triggered by Japan’s aging population. The number of domestic acquisitions has risen from 2 814 in 2018 to 3 000 in 2019, the number of international deals has grown from 777 to 826. The cumulative amount of internal deals grew to US$56 billion. Large corporate governance reforms also took place, bringing more directors and investors forward to decision-making.
The good times, however might soon come to an end. The first possible reason for this is the pessimism about the future of global economy. The Japanese companies are generally pessimistic, and the state and even international institutions share their mood. Three months ago, the International Monetary Fund has officially lowered the growth forecast for 2020 to 3.4%. Japan’s forecast has dropped from 0.8% to 0.5%.

The second reason for pessimism is the possibility of an upcoming exhaustion of Shinzo Abe’s governance reform. There are also some notorious elements of the reform, such as the new rule, that requires a government approval for foreign investors to buy over 1% of companies with connection to national security.