They're baaaaack. While the Chinese are busy grabbing all of the headlines, it's really the Japanese who are making the biggest moves.
So far this year, they've very quietly spent $101 billion on overseas acquisitions in a global buying spree that now dwarfs the one undertaken in the late 1980s and early 1990s according to Edward Jones of Dealogic.
S&P Capital IQ reports 45 deals with a value of $18.7 billion year-to-date involving a Japanese investor or buyer and U.S. assets alone. That's a 50% increase in the number of deals and a 64% increase in the valuation versus last year at this time.
To put this binge into perspective, not only is this the highest year on record, but it is on a pace that's three times the acquisition rate that had everybody quaking in their boots 30 years ago.
I think that's very telling on a couple of levels.
First, Japan's economy is faced with a triple disaster. When you add up private, corporate and government debt, it's nearly 500% of GDP according to numbers from Goldman Sachs earlier this year, which makes the Greeks look positively miserly. Even our own fiscal cliff pales in comparison.
Second, fully 25% of their population is going to die off by 2050, according to the Japanese Health Ministry, further exacerbating the near-complete shutdown in domestic demand that repeatedly plagues any attempt to jump-start the Japanese industrial machine.
And third, Japanese corporations themselves are struggling on every level. Decades of low and no growth have paralyzed even the best companies.
That's why so many Japanese companies are now turning their attention to global markets. They have to – it's the only way they're going to survive.
The Japanese Hunt For Growth
Japan's economy is not growing at 7% a year; instead it's fighting to maintain any kind of positive momentum whatsoever.
Its executives are struggling to cope with highly competitive markets that move faster and more decisively than they are prepared to accept. According to McKinsey, productivity per worker is one of the lowest of any developed country.
In short, the Japanese economy is vulnerable rather than in a position of strength.
This changes the game significantly and gives the Japanese a new sense of urgency. Japanese companies literally have no alternative. Almost every market they've dominated for years is failing.