Visitors and electronic screens showing Japan’s Nikkei stock board are reflected on window glasses as the stock average rose past a record high in December 1989 in a building in Tokyo, Japan, on February 22, 2024.
11:53 JST, May 6, 2024
Tokyo (Jiji Press) – Nearly 50 percent of investments through the new Nippon Individual Savings Account, or NISA, program went into Japanese stocks from January through March, a survey shows.
During the quarter, the Nikkei 225 stock average rewrote its all-time high for the first time in 34 years, rising further into the top 40,000.
The new NISA tax exemption program for small lot investors, which allows larger tax-free investments, started in January and replaces the previous NISA program.
According to the Japan Securities Dealers Association’s survey of ten major traditional and online brokers, including Nomura Securities Co. and SBI Securities Co., domestic stocks accounted for 47 percent of purchases made through the new NISA program between January and March. 50 percent for investment funds.
“The amount purchased through NISA was more than three times the previous year’s level,” said Kotaro Yoshida, general manager of Daiwa Securities Co., as he explained the moves by NISA account holders with the company.
“About 80 percent went to stocks and 20 percent to investment funds, and most of the stock investments went to Japanese stocks,” Yoshida added.
Stocks with stable and high dividends were especially popular.
Japan Tobacco Inc., which plans to pay an annual dividend of ¥194 per share in 2024, was the most popular investment destination among NISA account holders at SBI Securities, according to the online securities giant.
Nippon Telegraph and Telephone Corp. followed, followed by Mitsubishi UFJ Financial Group Inc., SBI Securities said.
In March last year, the Tokyo Stock Exchange asked TSE-listed companies to pay more attention to capital efficiency and stock prices. This led to an increase in the number of companies focusing on shareholder returns, including dividends.
Meanwhile, some investors are bearish on Japanese stocks because it is believed that the Japanese market is likely to shrink as its population declines, unlike the markets of other countries, including the United States, which have many powerful high-tech companies.
Investment funds that mainly invest in foreign shares are very popular among the holders of the new NISA accounts. Many market players are concerned about an ‘outflow of household funds to other countries’.
Ryohei Kobayashi, a popular YouTuber who teaches investing to beginners, recommends investing in foreign stocks.
Kobayashi said he will be able to think positively about investing in Japanese stocks if the country “addresses the labor shortage by actively accepting immigrants and using artificial intelligence systems.”
