Newsletter N°90 - June 2026 

Yen Depreciation Sparks Foreign M&A Surge Despite Tokyo's Massive Interventions 

At the end of June, the JPY/USD exchange rate continues to hover near a four-decade low. This persistent weakness remains despite Tokyo deploying approximately €65 billion in market interventions since May, efforts that have ultimately yielded no decisive effect in halting the currency's decline.

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However, the prolonged depreciation of the yen is drastically reshaping corporate activity. The weak currency is aggressively fostering inbound M&A and foreign direct investment. Notably, the number of Japanese companies acquired by foreign entities has seen a substantial increase, multiplying roughly 16-fold since the asset price bubble era. Conversely, outbound investment from Japan is drying up, with small and midsize businesses bearing the brunt of the unfavorable exchange rate.

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MSCI Maintains South Korea’s Emerging Market Status Despite KOSPI Rally

In sharp contrast to the recent frenzy on the KOSPI index, which remarkably doubled in a matter of months, MSCI maintained a conservative stance in its annual classification review. The index provider once again kept South Korea categorized as an Emerging Market and declined to place the country on its watchlist for a potential upgrade to Developed Market status.

According to MSCI, several market accessibility bottlenecks persist. Chief among these concerns is the lack of a fully deliverable offshore KRW market, which continues to limit liquidity and flexibility for global investors.

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Beijing’s Export Controls Strike Key Japanese Industrial Players

In a significant setback for international business operations, geopolitical frictions continue to spill over into trade policy. Beijing has announced strict new export controls on several major foreign-linked companies, banning the export of critical dual-use items (goods with both civilian and military applications).

The restrictions specifically target key subsidiaries of Japanese industrial giants, including Hitachi, Mitsubishi Heavy Industries (MHI), and Komatsu.

This move underscores the deepening strain in diplomatic relations between the neighboring economic powers, offering global supply chains little sign of near-term relief.