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Macquarie has a 19.9% stake in Japan Airport Terminal; will it be allowed to buy more?

Is Japan about to face a test? Earlier this week, US Assistant Treasury Secretary Clay Lowery told the Foreign Correspondent’s Club of Japan that “There are concerns among investors that Japan may not be fully committed to attracting FDI (foreign direct investment). It is therefore important Japan sends a clear signal that it is open for investments.”

Just a month ago, European Union Trade Commissioner Peter Mandelson, while on a visit to Japan, declared it to be the most closed developed economy to foreign investors.

Both are most likely thinking of the recent order issued by the Ministry of Economy, Trade and Industry against the UK-based Children’s investment fund. The government decided that allowing TCI to double its share in J-Power from 10 to 20 percent would endanger national security. TCI is already the largest single shareholder in J-Power.

Now, we have learned via the Nikkei that Japan Airport Terminal, the company that operates Tokyo’s Haneda Airport, is 31.5% held by foreign investors. Eight months ago, that figure stood at 24.7%.

According to the paper, Macquarie Airports Ltd, a unit of Macquarie Bank, is now JAT’s top shareholder, having amassed 19.9% of the company since it began buying shares last July. Japan Airport Terminal intends to extend the takeover defenses that it adopted last year.

Back in February, the government decided against passing a law to place a limit on foreign ownership of Japanese airports to less than one third. Although this was seen in some circles as a positive sign, it really doesn’t matter now that a national security law has been invoked to stop TCI from buying shares in J-Power. The question now is whether the Japanese government will continue to issue orders against foreign investors in such cases, and if it does - what potential risks could the financial markets face as a consequence?

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