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Japan and Australia to boost Asia M&A activity in 2020, UFP says

[SINGAPORE] Mergers and acquisitions in Asia will see an uptick next year due to rising shareholder activism in Japan and a weakening local currency in Australia, United First Partners said.

Companies with high cash or cross-shareholdings will face more scrutiny from activist investors in Japan, and Australian companies will entice higher interest from foreigners, according to the investment and advisory group that specialises in equity special situations

"Corporate governance reforms in Japan and inbound acquisitions in Australia would be key M&A themes for Asia in 2020," said Justin Tang, head of Asian research at United First Partners. "There will also be a lot of block trades around these events."

Shareholder activism has been increasing in Japan since Prime Minister Shinzo Abe sought to improve how companies are run by instituting a stewardship code for investors in 2014 and a corporate governance code the following year. Australian assets have gotten cheaper for overseas investors as the nation's currency weakened 3.8 per cent against the greenback this year.

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Asia has seen 1,591 deals with listed companies as targets announced this year with Japan and Australia contributing 241 and 100 in that count, respectively, according to data compiled by Bloomberg.

Mr Tang also expects restructuring at China's state-run companies, privatizations in Hong Kong and consolidation in Singapore's real estate investment trusts to continue in 2020.