Results of the CFA Society Japan and CFA Institute survey
On October 8, 2019, the Ministry of Finance (MOF) in Japan, unveiled a proposed amendment to the Foreign Exchange and Foreign Trade Act (FEFTA). This amendment lowers the ownership threshold in companies deemed to be nationally sensitive from 10% to 1% before government pre-approval is required for foreign shareholders.
Subsequently, the MOF has included provisions to exempt from this 1% prenotification requirement investors that are neither seeking board seats nor looking to propose shareholder resolutions on sales or divestments. For these investors only a post-investment report will be required.
As this amendment is of significant importance to the investor community both in Japan and overseas, from November 15, 2019 to November 27, 2019, CFA Society Japan and CFA Institute conducted a survey of professionals in the investment industry in order to gauge their understanding and concerns on the amendment to FEFTA.
The survey met with high interest of the investment community, whose members were keen to express their opinion on this matter. We were able to collect 115 responses, 70 of which came from practitioners at Japanese institutions and 45 from outside Japan.
The results show that almost 70% of respondents do not agree with the amendment, and 86% are concerned that the amendment might have a negative impact on investment into the Japanese equity market.