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Forex Flash: Japanese M&A activity subdued in Q1 - Nomura

FXstreet.com (Barcelona) - Senior Nomura strategist Kengo Nishiyama notes that Japanese M&A activity was subdued in Q1 and he is expecting a pickup in activity as growth in corporate earnings becomes clear.

He begins by commenting that his calculations based on Bloomberg data put the value of Japanese corporate M&A deals over Q1 at ¥1,866bn, down 33.8% y-y. The value of domestic M&A (Japanese companies buying Japanese companies), outbound M&A (Japanese companies buying overseas companies), and inbound M&A (overseas companies buying Japanese companies) all declined y-y. He sees that with the number of deals also falling, by 13.2% y-y to 590, M&A activity as a whole was subdued.

With Q1 a time of great change in the Japanese corporate environment as the new Japanese administration took up the reins, he thinks some companies took a wait-and see stance and held off engaging in M&A and other major corporate action. Looking ahead, he thinks that the shift toward a weaker yen could have an impact particularly on outbound deals. However, M&A remains an important means of boosting corporate value, and he continues to expect M&A activity to pick up as improvement in corporate earnings becomes clear against a backdrop of stock market recovery and abundant cash and deposits generally held by Japanese companies.

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