Daiwa Securities’ Performance Surges on M&A Activity: Reading the Trends in International Financial Markets

In the year 2025, bright news has arrived in the international financial markets. Daiwa Securities, one of Japan’s leading financial institutions, announced strong financial results that far exceeded market expectations. The driving force behind this was the phenomenal boom in merger and acquisition (M&A) dealmaking.

These results are more than just a success story for one company. It is powerful evidence that the global economy is entering a new phase of growth and that companies are seeking strategic change.

The Dynamism of the M&A Market and Daiwa Securities’ Strategic Triumph

Why is M&A so active right now? As an international financial journalist, I see multiple factors behind this.

• Accelerating growth strategies: Many companies are accelerating their growth by acquiring new markets, technologies, and customer bases through M&A, not just as an extension of their existing businesses. This has become an essential means of establishing sustainable competitive advantage.
• Portfolio restructuring: In the wake of the pandemic, companies are further reassessing their business portfolios. They are aggressively divesting non-core businesses and concentrating investments in growth areas with future potential.
• Benefit of low interest rates (legacy): In the past, very low interest rates made it easier for companies to finance acquisitions and encouraged large deals. While interest rates are currently on the rise, the momentum is still there and companies remain highly motivated to raise capital.
• Digital Transformation and Sustainability: Technology acquisitions and restructurings with ESG (Environmental, Social, and Governance) investments in mind are also gaining momentum. These are strategies directly linked to the long-term value enhancement of a company.

Daiwa Securities has successfully completed a number of major deals in this dynamic market by leveraging their outstanding advisory capabilities and global network. Their strategic positioning and ability to execute has undoubtedly contributed greatly to this achievement. In particular, their early recognition of the potential of emerging markets and the resources they have devoted to them have been decisive factors in establishing their competitive advantage. Emerging markets often offer untapped growth opportunities, making them an attractive arena for visionary investors.

Behind the Scenes of Dealmaking: Factors Underpinning Success

A successful M&A deal requires a great deal of expertise and a detailed strategy. It is essential to plan not only for the acquisition of the company, but also for post-merger integration (PMI). Investment banks like Daiwa Securities are indispensable partners in this complex process.

They can help make a deal a success by providing a wide range of services, including

• Strategic Advice: We assist our clients in the early stages of a deal, including target identification, acquisition strategy development, and market analysis.
• Valuation: We evaluate the fair value of the target company to arrive at a fair and acceptable transaction price.
• Financing: We arrange acquisition financing (debt/equity) and propose the optimal financing structure.
• Due diligence: We protect our clients by identifying potential risks through detailed financial, legal, and business investigations.
• Negotiation Support: We facilitate negotiations between sellers and buyers to reach an optimal agreement for both parties.

In particular, the increase in cross-border M&A has been attracting attention in recent years. Cross-border M&A involves complexities not found in domestic M&A, such as differences in culture, legal systems, and regulations. At the same time, however, it also brings significant benefits, such as new growth opportunities, technological innovation, and expanded market access.

Daiwa Securities has accumulated expertise in facilitating these complex cross-border deals through years of international experience and collaboration with experts in various regions. Many of the deals they have worked on have facilitated investments in growth industries in emerging countries or the restructuring of existing industries. This is a testament to their ability to identify the most attractive investment opportunities from a global perspective.

Against this backdrop, fast-growing emerging markets in particular, such as Central Asia, are beginning to emerge as the next M&A frontier.

The Rise of the Central Asian M&A Market: Uzbekistan’s Potential

Central Asia can no longer be ignored when discussing trends in the international M&A market. In particular, Uzbekistan is becoming an attractive new destination for international investors due to its abundant natural resources, strategic geographic location, and economic growth driven by its reform and open-door policy.

The government of Uzbekistan has been pursuing aggressive economic reforms in recent years. These will provide a new impetus for M&A activity.

• Privatization of state-owned enterprises: Uzbekistan is opening its doors to foreign investors to increase efficiency and competitiveness. This is a strong driver for creating new investment opportunities.
• Improving the business environment: tax reform, liberalization of foreign exchange, and easing of the visa system will encourage investment. Increased transparency and predictability are a great source of reassurance for investors.
• Accelerating infrastructure development: Investments in transportation networks and energy infrastructure are active, which is strengthening the foundation for economic growth.

Specific investment opportunities include the following areas

• Energy and Mining: With abundant resources such as natural gas, gold, and uranium, M&A is expected in the exploration, development, and processing sectors. Securing resources is a strategic priority for many countries.
• Agriculture and food processing: Cotton, fruit, and vegetable production is thriving, and investment in value-added processing industries is on the rise. The potential for food security and export expansion exists.
• Tourism: Many historic Silk Road cities are modernizing their tourism infrastructure and services. There is strong investment to attract international tourists.
• Digital Economy/IT: With a large population of young people, there is tremendous potential for digitalization; new opportunities are opening up in e-commerce, fintech, software development, and more.

Central Asia was once seen as a region where information was scarce and investment was difficult, but not anymore. International investment banks and private equity funds are beginning to pay attention to the region’s potential. For Japanese companies, the strategic benefits are immeasurable: securing resources, developing new markets, and securing a base in a key geopolitical location. Uzbekistan is truly a “hidden gem” and will be an important stage for future M&A deals.

Future Prospects as Read by an International Finance Journalist

Daiwa Securities’ strong results and the booming M&A market are a sign of the resilience of the global economy and the willingness of companies to adapt to change and pursue growth. However, as an international finance journalist, I must also point out some important issues when discussing the outlook for the future.

• Rising interest rates and inflation: Rising global interest rates may push up M&A financing costs and impact deal flow. Inflationary pressures also have a complex impact on corporate valuations.
• Geopolitical Risk: Geopolitical tensions, such as the Russia-Ukraine war and the U.S.-China conflict, create uncertainty for cross-border M&A. In particular, regions such as Central Asia will not be immune.
• Increased regulation: Governments are increasingly tightening their scrutiny of M&A for national security and anti-trust reasons. This may increase the hurdles to deal execution.

Nevertheless, M&A remains a powerful engine of corporate growth. Companies will become more strategic and select deals more carefully.

• Digital Transformation and AI: M&A will continue to accelerate as companies embrace technologies such as AI, IoT, and Big Data. These have the power to fundamentally transform a company’s competitiveness.
• Supply Chain Restructuring: Exposed vulnerabilities in global supply chains could lead to more M&A aimed at stabilizing supply. Strengthening resilience is a pressing issue for companies.
• Exploring emerging markets: Investments in untapped growth markets, such as Uzbekistan in Central Asia, have the potential to yield high returns. Early entry in frontier markets offers significant advantages.

Financial institutions like Daiwa Securities must adapt to these changes and continue to deliver value to their clients even in complex market environments. Their knowledge and network will be an indispensable compass as firms navigate this new era.

The future of international finance is constantly changing and challenging, and M&A will continue to be a powerful tool to capture these changes and create opportunities for growth.