Wednesday, February 11, 2009

Yen Shopping Spree Finally Here?

A strong currency has crushed the Japanese trade balance in recent months.



While the strong Yen makes Japanese businesses uncompetitive (Japan is an export based economy), there are benefits of having a strong currency. Back in October I pondered whether there would be a Yen Based Acquisition Spree on the Way? It looks like it may be. Bloomberg reports:

“A lot of assets have gotten extremely cheap and Japanese investors are looking to park their money somewhere,” said Kenichiro Ikezawa, who oversees about $3 billion as a fund manager at the second-largest brokerage in Tokyo. “Emerging markets including Brazil, Mexico and Turkey look attractive. We would like to invest more in such countries.”

After a year when the yen rallied against 177 currencies, Japan’s biggest money managers say the best is over in the foreign exchange market. The nation’s investors bought 940 billion yen ($10.3 billion) more international stocks and bonds than they sold in the five days to Jan. 31, the seventh week of net purchases, according to the Ministry of Finance.

Japanese companies are also taking advantage of the strengthening currency, spending record amounts on mergers and acquisitions outside the country. The total value of overseas takeovers more than tripled to $76.8 billion last year, according to data compiled by Bloomberg.