M&A lifts Japan's 2016 net external assets to second largest on record

TOKYO - Japan's net external assets rose to their second-highest amount on record at end-2016 driven by rising mergers and acquisitions overseas by Japanese firms and portfolio investment, the Ministry of Finance (MOF) said on Friday.

The net value of assets held by the government, businesses and individuals stood at 349 trillion yen ($3.12 trillion) - just behind 2014's record 363 trillion yen. It meant Japan remained the biggest creditor nation for the 26th straight year, the MOF said.

As at end-2015, Japan's net external assets were at 339 trillion yen.

Japan's net external assets were about 1.7 times those held by China, the world's No.2 creditor nation with 210 trillion yen in net assets at the end of last year, followed by Germany, the ministry said.

Japan's gross external assets rose 5 percent to a record 998 trillion yen as increase in Japanese direct investment overseas and foreign bond investment more than offset drops in the appraised yen value of foreign currency-denominated assets.

Japan's direct investment in the United States reached a record 53 trillion yen at end-2016, up 2.7 trillion yen from a year ago, making it the most popular destination that accounts for a third of overall Japanese direct investment overseas.

Overall external debt grew 6.2 percent to a record 649 trillion yen due to increased foreign direct investment and acquisitions of Japanese bonds by foreign investors.

The dollar lost 2.7 percent in value to 117.11 yen at the end of 2016 from a year ago, while the euro fell 5.9 percent to 123.43 yen, the ministry said. -Reuters