Japan’s new protectionist rules aimed to reduce foreign ownership in nationally sensitive assets is unpopular with global firms, according to a CFA survey, especially among asset managers.
A whopping 86 percent of respondents expect «negative» or «very negative» impact to foreign investment flows into Japan, said a CFA Society Japan report on the latest proposed amendment to the Foreign Exchange and Foreign Trade Act (FEFTA), which include a reduced ownership limit for key national companies from 10 percent to just 1 percent.
Among respondents, 70 percent did not agree to the FEFTA amendments with 72 percent specifically dissatisfied with the revised ownership thresholds in «companies deemed nationally sensitive.»
Defense Only
A key part of Japan’s amendment deals with protectionism of key assets and its revised ownership limits focuses on various sectors it deems critical – 58 percent of the surveyed respondents cited the «wide coverage» of industries as a source of dissatisfaction with the FEFTA amendments.
Some 97 percent of respondents agreed to protecting the defense sector while less than 20 percent of respondents agreed with wider inclusion of the railways, agriculture, forestry and fisheries, and shipping industry.
«While some respondents understand that the government sees scope to tighten the current regulations around nationally sensitive industries such as defense, they believe there should be other methods to do so,» the report said.
«[Respondents] mentioned that there are many small-cap companies in Japan where a 1 percent threshold would make these companies too difficult to invest in for global funds.»
The survey covered over 100 Japanese and non-Japanese institutions of which over half were asset managers.
