Video #2 - Foreign Mergers & Acquisitions
Friday, January 06, 2006BACKGROUND INFORMATION
The Development Bank of Japan states in its web site that it wants to bring about a Japan that is both vigorous and in harmony with the economies of other nations." Recently, Japan has seen how important foreign direct investment is in terms of stopping unemployment and adopting efficient management policies.
At the same time, many companies with global business strategies regard Japan as an attractive market. Japan is the core economy in Asia, it has a high-income population and a massive consumer market for goods and services. It is advanced in technology and highly-skilled in such areas as production and quality control. But since the collapse of Japan's "bubble" economy, there have been prolonged and massive declines in the prices of real estate, stock shares and other assets. And social and institutional risks have been reduced in part by the government's strong commitment to deregulation.
Yahoo Asia Financial News for Thursday, February 3 reports that foreign investors were net buyers of Japanese stocks in the week ended January 28 on the Tokyo, Osaka and Nagoya bourses. Foreigners bought net Y165.35 billion in the week, compared to net purchases of Y82.01 billion in the previous week. Foreign investors have now extended the streak of weekly net purchases to three straight weeks.
According to the Japan External Trade Organization (JETRO), one tie-up between a Japanese bank and a foreign institution that has grown into a full-fledged alliance is that between The Dai-Ichi Kangyo Bank, Ltd. and J.P. Morgan Investment Management Inc. The two sealed a comprehensive investment trust business alliance in March, jointly establishing a new venture called Dai-Ichi Kangyo J.P. Morgan and Investment Management Co., Ltd. to combine J.P. Morgan's global strength in asset management with Dai-Ichi Kangyo's domestic branch network.
The shake-up in the investment trust business and increased interest among investors has also sparked considerable activity among foreign asset management firms in Japan. One of these is Goldman Sachs Investment Trust Management Co., Ltd. Goldman Sachs and Japanese computer parts maker Kyocera Corporation announced last month that they were setting up a fund to invest in small but promising high-technology firms in Japan. The US investment bank and Kyocera said they would establish the 30-billion-yen private fund to take advantage of the flourishing information-technology sector of the depressed Japanese economy. Foreign firms' share of the total balance of investment trusts in Japan in 1998 stood at 10.2%, up from 5.5% the previous year.
Furthermore, Yahoo Asia News reported on February 2nd that J.P. Morgan is to invest up to 92 million dollars in small Japanese firms this year. It is negotiating the purchase of minority stakes in about 10 firms under a plan to invest five to 10 billion yen (46 to 92 million dollars) in new Japanese firms, spokeswoman Shuri Fukunaga said. Targets would include "telecommunications, high-technology and computer companies," along with distributors and retailers, she said. J.P. Morgan hopes to realize annual returns of about 30 percent on its investments.
SOURCES:
dbj.go.jp/support/support01_e.html state.gov/www/about_state/business/com_guides/1999/eastasia/japan99_07.html (Japan Investment Climate Statement by U.S. State Department, extensive) Yahoo Asia Finance News
10-12/Economics, International Relations, World History, International Bachelaurate Programs(IB), Current Events.
LESSON PLAN
PURPOSE: to present activities to be used at a variety of classroom situations in order to enhance student understanding of Japanese economy and its significance globally.
Students will be able to:
- Develop charts and graphs to show the growth of foreign investment in Japanese firms.
- Locate interdependent mergers between Japanese companies and those of other nations on a map of the world.
- Develop charts and graphs to show Japan's investments in other countries.
- Write an editorial evaluating the role of investment trusts in the future of the Japanese economy.
- Role play a conference of CEOs a Japanese firm and a US firm involved in a merger answering questions from stock holders of their respective firms.
MATERIALS:
- Background information provided.
- Resources on foreign mergers and acquisitions in the Japanese market at your school's Media Center and the Public Library System in your area.
- Background information available through Internet "search engines".
- dbj.go.jp/support/support01_e.html
- state.gov/www/about_state/business/com_guides/1999/eastasia/japan99_07.html (Japan Investment Climate Statement by U.S. State Department, extensive)
- Yahoo Asia Finance News
EVALUATION: Individual assignments should be graded by the teacher using established criteria. Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale:
Content 1= Superior (A) Creativity 2= Excellent (B) Clarity 3= Good (C) 4= Fair (D) 5= Poor (F)
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