Horizons newsletter – Week 20 // 2018

Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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The push for Japan’s outbound M&A
Takeda, Japan’s largest pharmaceutical company, recently bought Irish drugmaker Shire for $62 billion: the largest Japanese overseas acquisition ever. It is a shift in strategy: in the 1980s, when almost half of the 50 largest corporations in the world by market capitalization were Japanese,  outbound M&A was almost unheard of. Back then, the growth of corporate Japan was driven by its strong macroeconomic performance and manufacturing competitiveness. Today, however, Japan’s socio-economic environment is pushing outbound deal making. Most notably, its shrinking and rapidly ageing population, which peaked in 2008, means that long-term and structural growth must be found outside the country. Furthermore, Japan’s government is actively encouraging Japanese outbound M&A  through fiscal stimulus for Japanese corporates and ultra-low interest rates, both part of the “Abenomics” policy. Lastly, and in contrast to the 1980s, Toyota is the only Japanese company  left in today’s top 50 largest companies, as Japanese manufacturers have lost their competitive ground during its “Lost Decade”. As such, outbound M&A should give Japanese companies access to new sources of innovations and growth.

Is peace coming to the North Korean peninsula?
Following the Pyeongchang Winter Olympics, relations between North Korea and the global community have markedly improved. Historical meetings have been arranged with the leaders of South Korea, China and even the U.S. There is indeed momentum for improved relations: South Korea no longer has a hardline president, China is pushing for a diplomatic resolution, and Trump is the first sitting American president to agree to a meeting with a North Korean leader. Most importantly, North Korea has gained diplomatic recognition and Chinese scientists suggest its nuclear site has collapsed. Consolidation of the new status quo thus seems prudent. We should however be careful with our optimism. This sudden shift of North Korea is part of its strategy of unpredictability. Only by appearing unpredictable and erratic, and willing to threaten its own existence, will larger countries take its threats seriously. The country has used unpredictable swings in behavior to its advantage for decades. It might appear to be willing to talk now, but like in the past, it will eventually leave the negotiating table again.

Out of Space
Today’s thriving commercial satellite industry is building and launching satellites into orbit that are more affordable, accurate and sophisticated than ever before. New services enabled by these satellites go way beyond GPS navigation and military intelligence. Already, satellite-originated image data complements and sometimes replaces traditional data sources. For instance, in countries that suffer from a lack of publicly available macroeconomic data, night light images that correlate electricity usage with development of cities provide more in-depth information on economic growth than GDP forecasts or traditional census, and at lower expense and a faster pace. The World Bank already works with Orbital Insight to study poverty in Sri Lanka. This company also uses AI on satellite images to detect deforestation. Via the Bloomberg Terminal, brokers have access to Spaceknow’s monthly images and use it as a source to measure economic activity in African countries. What is next? As soon as intraday data insights will be available – Orbital Insight predicts within 3 to 5 years – skyrocketing economical, climatological and disaster-recovery insights will arise from the view from above.