Craig Mellow
Japan wants to become an asset management superpower, funneling an estimated $7 trillion in mattress money and low-yielding bank accounts into its booming stock market. Being Japan, it has a strategy for that: the Doubling Asset-Based Income Plan hatched in 2022.
Prime Minister Sanae Takaichi just doubled down on asset mobilization with an initiative to invest 370 trillion yen ($2.3 trillion), most of it private money, in strategic industries over the next 15 years.
"Japan's uniquely large pool of household financial assets means a structural shift in allocation could materially reshape capital markets, " says Daisuke Nomoto, head of Japanese equities at Columbia Threadneedle Investments.
It may take a while, though. Redeploying from a savings account paying less than 0.5% to a Nikkei 225 index that has gained three-quarters over the past year might seem to make sense. It does to Japanese under 40, who are piling into Nippon Individual Savings Accounts, a 401(k)- style tax-advantaged program that the government expanded in 2024. The number of NISA accounts grew 10% last year to 28 million in a nation of 123 million.
Their elders, who are more numerous and much richer, remain scarred by the bull market of the 1980s, which crashed in 1990 leaving lost decades in its wake. "The baby boom generation is still traumatized by the bubble," says Jesper Koll, global ambassador for booster group FinCity.Tokyo.
Average return on Japanese household financial assets has inched up from 1% to 1.7%, he says. The U.S. figure is around 6%.
The proverbial Mr. and Mrs. Watanabe, or their children, don't necessarily favor Japanese equities either. Individual investors sold an aggregate $25 billion worth of Japanese securities last year, buying more than twice that amount abroad, according to Japan Exchange Group. The trend continues for 2026, Koll says. "The market is rising on foreign flows and massive share buybacks by Japanese corporates," he says.
Tokyo Stock Exchange rules discourage individual shareholders with a 100-share purchase minimum, adds Neil Newman, head of strategy at Astris Advisory in Tokyo. Instituted in quieter times to keep out Yakuza -- the organized crime syndicates -- the standard now puts "many highflying stocks out of range," he says. A minimum stake in Tokyo Electron, the Nikkei's top component, would cost $46,000 today.
Japan Inc. is responding with a frenzy of stock splits, 60 of them in the first quarter of 2026 alone -- an imperfect remedy at best.
Japanese equities also look vulnerable to a downturn in global tech stocks, Newman says. The four top names in the Nikkei have surged to nearly 40% of the index's value. Three of them -- Tokyo Electron, Advantest, and SoftBank Group -- are artificial-intelligence proxies.
So Japanese households' caution may end up looking wise compared with counterparts in South Korea or Taiwan, who have been riding the AI wave with increasing doses of leverage. Investors are shifting to mutual funds to evade the 100-share rule.
Asset managers are developing income-oriented equity products that may lure older savers off the sidelines, Nomoto says. Out-of-fashion industrial blue chips like Toyota Motor or Nippon Steel offer dividend yields of 3.5% to 4.5% at current prices, a lot better than money in the bank.
Tsunami or glacier, Japan's unique household savings pool will be in play if the decades of deflation are really over. It could affect financial currents near and far.
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(END) Dow Jones Newswires
June 25, 2026 14:39 ET (18:39 GMT)
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