Japan times reported earlier this week that according to a private survey nearly 90% of institutional investors are worried about the possible negative effects of a law revision, tightening restrictions on foreign investment.
The law was enacted in November 2019 and is expected to take effect around May next year. The new law requires foreign investors to notify the government before acquiring a stake of 1% or more in listed companies in national security-related fields such as weapons, nuclear energy and semiconductors.
According to 86% of responding institutional investors, the revised law could negatively affect foreign investment in Japanese stocks.
Institutional investors will be exempt from the tighter regulations unless they demand a position on the company’s board or the transfer or discontinuance of a key business. However, 70% of the respondents opposed the revised law, citing the stricter requirement and the wide range of companies the obligation covers.
Market players are worrying that the scope of exemption is unclear and that details of the law are not widely known abroad because the government is not proving enough information in English.
The Finance Ministry is drawing up related ordinances, Japan times concluded.