Mergers, Acquisitions In Japan Could Lose Momentum Amid Global Recession Fears

Japanese M&A activity could slow down this year amid concerns of a global economic downturn and the country's slower corporate reform pace, according to Nikkei Asian Review.

What Happened

M&A deals in Japan reached an all-time high in 2019, thanks mainly to the government’s corporate reform push.

Domestic acquisitions rose from 2,814 in 2018 to 3,000 in 2019, while outbound deals climbed to 826 from 777 in 2018, according to RECOF Corporation, a Tokyo-based research firm, Nikkei Asian Review said. 

The country’s M&A momentum could slow down in 2020 as global recession fears take hold and Prime Minister Shinzo Abe's corporate governance reform loses momentum. 

Why It Matters

The International Monetary Fund lowered its global economic growth projection for 2020 by 0.2 percentage points to 3.4%.

The IMF has also lowered Japan's 2020 growth forecast to 0.5%, down from 0.8% in 2019, mainly as weaker overseas demand affects exports and investment in Japan, according to Nikkei Asian Review. 

Japan tightened its foreign investment rules in 2019. Under the revised rule, foreign investors need to seek government approval before acquiring stakes of 1% or higher in companies related to national security.