Research Report APLMS Date 10 March 2026
Author Abraham David
【日本語】
Japan is being stalked by the wolves of finance.
Finance, like water, is always looking for the easiest path to accumulate.
In the world, there are several places where money has accumulated,
where savings are far bigger than debts. Shakespeare’s Hamlet received
the great fatherly advice, never a borrower or a lender be. While the
Japanese government has a net debt of almost 130% in 2026, much of
this debt is owed to itself, with only 11% owned by foreigners. The
Central Bank of Japan buys a vast majority of Japanese government debt.
This is a circular process in which the left hand lends to the right hand.
Along with this, Japanese private banks, insurance companies, and
pension funds also hold Japanese government debt.
Japan pioneered, under American instruction, the strategy of quantitative
easing, printing money and bringing down the cost of that money to
zero or very low interest levels. This led to the so-called yen carry trade,
where financial institutions led by the US borrowed money in Japan at
low interest rates and invested it globally in areas delivering higher
returns.
The normal Japanese have the psychology of the chipmunk, storing away
nuts for severe winters. This is part of the Japanese psyche, making them
one of the world’s largest net savers. Huge amounts of savings are
deposited into financial institutions led by the post office and the
Postal Bank of Japan, earning low returns. As many Japanese say their
money is “sleeping”.
Many leading Japanese corporations were founded in the Meiji period,
from 1868 to 1912, led by Mitsubishi. They joined the old existing
merchant families such as the Mitsuis and the Sumitomos. These major
companies, Mitsui, Sumitomo, Mitsubishi, and Yasuda, built corporate
organisations around historical clan-like structures.
These were called the Zaibatsu, and post-WWII were renamed Keiretsu
Japanese companies had interlocking shareholdings with diverse
operations, including industrial, banking, trading, and shipping, all of
which were under the umbrella of corporate families. In many cases,
they were a response to the Western attack and pressure on Japan. Other
companies, such as Toyota, Honda, Matsushita Electric Company, and
Sony, developed specific technologies, such as automobiles and
electronics.
After defeat in WWII, Japan, for the first time in its history, was occupied
and controlled by a foreign power, the United States became the
preeminent Asian-Pacific power, defeating Japan’s goal of creating the
Great East Asian Co-Prosperity Sphere.
Embracing defeat, the Japanese elite, after 1945, made themselves useful
to the American occupiers and were kept on as the managers of the
Japanese state and corporate world, taking advantage of the
opportunities that the Cold War gave them as the Soviet Union emerged
as the major competitor to the US.
China slipped from the grasp of America with the rise of the communist
party in 1949, making the US more dependent on Japan than it otherwise
would have been. The Japanese elite at the time were able to read the
world around them and, to some degree, position themselves as US allies
to their advantage, becoming an aircraft carrier in the Pacific for the US
military, stationing troops right across Japan. The Japanese were allowed
to rebuild their economy with American help as long as they stayed
dependent on the US.
The Korean War and then the Vietnam War, the huge US conflicts in Asia,
allowed Japan room to maneuver and prosper.
Vassals are obliged to do what they are told, whereas allies have room to
negotiate. In Japan, they have tried to move toward a more flexible
alliance structure, best exemplified under the Prime Ministership of
Tanaka Kakuei, a self-made outsider politician who had the Japanese
people’s interests at heart. His undermining in the so called Lockheed
scandal, where he was accused of taking bribes from the US airline
manufacturer is part of the history of Japan’s subordinate status to the
US.
The peak of Japanese economic power in the late 1980s, while not
threatening America’s political and military interests, certainly
challenged them economically. The US was weakened by the Vietnam,
Korean and other wars, and this allowed Japan a bigger and bigger
economic role in the world economy. In the 1980s, Japan went through
one of the great bubbles in world history, where property prices in
Japan reached outrageous levels. At its peak, the estimated value of the
Emperor’s palace and surroundings was higher than the asset value of
the state of California, USA. Under the Plaza Accord in 1985, the
American forces Japan to apppreciate its currency, adding fuel to
the fire of Japan’s trade surplus and weakening its export
competitiveness.
In the 1990s, Japan managed the collapsing bubble through massive and
continuous fiscal stimulation, building bridges to nowhere and creating a
debt structure built on the government’s printing of money.
As well, Japan took advantage of the industrialisation of Asia,
moving a large part of the manufacturing and industrial base to
China and Southeast Asia and being cost competitive in many advanced
technologies. For e.g., in cameras, lenses are built in Japan and assembled
in China. This strategy was to be successful in allowing a slow but
managed decline of the Japanese economy, which was coupled with a
very difficult demographic as Japan aged faster than any other country.
The turning point for contemporary Japan’s corporate structure came
with Junichiro Koizumi, 2001 – 2006 and Shinzo Abe, 2012 – 2020.
Both prime ministerships embraced the Thatcher/Regan free market
model, not to the same extreme as the UK or the US, but it was strong
enough to weaken the old business structure of corporate Japan.
Japanese companies weakened their cross-shareholding, and a lot more
foreign investment, particularly led by US financial capital, was allowed
to enter Japan.
Today, many of the corporations in Japan, led by the Sogo shosha
(総合商社 trading companies) Mitsubishi, Mitsui and Sumitomo have
opened up their share registers. They now have large numbers of
financial speculators who have dominated the US economy, moving the
US from a broad based industrial economy to one based on speculative
financialisation. Along with the military-industrial complex, oil and gas,
high tech, and agriculture. All of these sectors want access to Japan and,
through Trump’s trade strategy, have put pressure on Japan to open up
and buy from America, placing strategic investment back into the US in
steel, autos and high tech.
In terms of investing in Japan, they are pushing Japan to develop an
American model of returns to shareholders. According to Shaking
Up the Boardroom The Economist, February 14, 2026.
When Abe Shinzo set out to revise the Japanese economy as
Prime Minister in 2010, he could not ignore the torpor of its
companies. Profits were meagre, enormous cash piles sat idle on
balance sheets, and cross holdings between businesses kept
activist investors at bay. The reforms he pursued breathed fresh life
into Japan Inc. In the 10 years before the introduction of a
new corporate governance code in 2015, Japanese companies
delivered a return for shareholders, including dividends of zero.
Since then, they have returned 170%, comfortably outperforming
their European peers. Activists have flocked to Tokyo and shaken
management teams to sell off underperforming businesses and
hand cash to shareholders through buybacks. Last year, listed
Japanese firms generated a return on equity of 8.6%, not
spectacular but up from an average of 6.3% between 2010 and 2015.
In the last 5 years, they have paid out dividends and
buy-backs equivalent to a respectable 33% of operating cash
flows.
Today, many of the large Japanese corporations, rather than having cross
linking holdings, have American investors as their largest shareholders.
Three of Japan’s largest corporations have Warren Buffett and his
Berkshire Hathaway Group as their major shareholders.
Warren Buffett saw the intrinsic value reflected in the balance sheets of
these companies. They had deep technological and disciplined industrial
structures that operated across several business sectors, and the internal
diligence, which is a big part of Japanese culture. Trade media reports
that in 2026, Berkshire Hathaway held 10% stakes in the large Japanese
trading houses: Sogo Shosha, Mitsubishi Corp., Mitsui & Co., Itochu Corp.,
Marubeni Corp., and Sumitomo Corp. Estimates exceed $30 billion.
Buffett acquired this 10% in 2020, allowing Buffett to exceed a previous
9.9% limit.
Other US private equity companies now operating in Japan: (1)
|
・KKR: Committed around ¥1 trillion of investment to Japan over the next decade, focusing on large buyouts and corporate carve‑outs ・Bain Capital: Long‑standing plan to invest ¥5 trillion by 2029 ・Carlyle: Raised a ¥430 billion Japan fund in 2024 and launched a ¥130 billion tender offer for KFC Holdings Japan ・CVC Capital Partners: Allocates 20% of its 6.8 billion to Japan ・EQT: Active in take‑privates, including the public‑to‑private acquisition of elevator maker Fujitec for roughly ¥408 billion ・Blackstone: Has made multiple deals and in 2025, announced a roughly 507 billion yen tender offer for TechnoPro |
Today, Japan has played a crucial role in the global financial system, as
explained, printing money through quantitative easing and lending at
low interest rates to speculative capital to be invested all over the world.
For decades up to the early 2020s, Japan was the world’s largest net
creditor nation, with one of the biggest positive net international
investment positions.
Global private equity companies led by the US have Japan in focus,
seeing Japanese companies as a tremendous opportunity, as corporate
buccaneers, plunder the cash and assets built up over the years by
corporate Japan. This will be at the expense largely of Japanese people,
direct employees, and corporate managers. As money is sucked out of
Japanese assets, the 1% will be richer than ever before.
Currently, the low yen policy of Japan and still relatively low interest
rates have made Japan an extremely cheap market to invest in, and there
is the possibility that this will continue for some time, making future
buying opportunities even more lucrative.
Japan has always been dependent on resources and agricultural inputs,
particularly in energy. The current crisis in the Middle East is affecting
Japan in extreme ways. Oil and gas imports from the Gulf mean that
Japan is vulnerable. This will affect the internal Japanese economy,
weakening the yen, making Japan an even more lucrative buying
opportunity.
The breaking up of Japan Inc. is well and truly underway. Can the
Japanese repulse this attack by finance capital and reposition themselves
in an increasingly complex world? Japan needs a strategy to lock in
energy and food security. This must be its number one priority, with
Australia being its natural partner.
With geopolitical conflicts increasing and financial stress will Japan be
able to position itself to have a seat at the table? Can the Japanese
government coordinate and develop a plan to make sure that the
Japanese people are put first and their interests are protected?
- (1) https://www.perplexity.ai/search/otehr-private-equity-companies-TnN9jxL1
SoK1J070_pnqMQ