Japan Moves to Limit Foreign Investment in Half of the Listed Firms
Japan has been rolling out tighter foreign ownership rules to counter the risk of China. Japan will be adopting similar measures taken by the US, Europe, to tackle security threats by China.
Significant companies like Toyota and Sony Corporation have been added to the list of National Security. And the Japanese government will be closely monitoring the foreign ownership of these companies.
According to the Ministry of Finance, “Out of 3,800 listed companies, the government has identified 518 firms that can have an impact on National Security. These companies can be easily targeted by China to breach security.”
Rules for Foreign Ownership will apply to the following industries:
- Oil
- Railways
- Utilities
- Arms
- Space
- Nuclear Power
- Aviation
- Telecoms
- Cybersecurity
These rules will apply to these industries from Friday.
Certain Restrictions Applicable in these companies
Limits to investments apply to more than half the listed companies in Japan
According to the Media Reports, foreign investors with a 1 percent stake in the companies will be forced to go through a screening test. Previously, when an investor bought a 10 percent stake, then he was required to go the process of the screening.
During the coronavirus lockdown, like other companies, Sony and Toyota had to bear the losses. The market value of Toyota and Sony has gone down by 15 percent and 6.4 percent, respectively.
Market Analysts believe that stricter foreign investment rules have been changed due to the risk of confidential information leaks. In Tokyo, China has a significant influence on the industries which make the defense information insecure during this pandemic.
But the opposition of Analysts believes that stricter rules could hamper the growth of Japan’s economy after this pandemic gets over. Investments are necessary to get Japan’s economy back on track.
Eventually, it will have an impact on the Stock market too and will be interesting to watch the turns in trading after the rules are imposed.
