Warum in Japan der Staat die Leute zum Investieren auffordert. «Viele ältere Japaner haben ihr Geld physisch zuhause», sagt eine Aktien-Expertin

In Japan, a new investor culture is emerging as people are being urged by the government to invest. Many older Japanese individuals keep their money physically at home, according to an expert in stock investments. The stock market correction may not help this situation. Since artificial intelligence (AI) has taken over the world, stock markets have boomed.

Even though equity markets faced a downturn after the American midterm elections, they recovered quickly. Many are unaware that the Japanese stock exchange, measured by the Nikkei 225 index since 2023, has outperformed the S&P 500 despite a weak yen. The Nikkei has gained around 130 percent in local currency during this period, while the S&P gained just over 90 percent.

Stock gains benefited investors worldwide, but fewer Japanese were expected. Investing in stocks has no long history in Japan among private investors, and there are significant differences in investment behavior between generations. Younger people aged 20 to 30 are more willing to invest and use online platforms and index funds for this purpose.

Recently, investing is slowly gaining ground in Japan thanks to the so-called Nisa programs. "This has made investing popular," says Hiromi Ishihara, who is responsible for Japanese stocks at the largest European asset manager, Amundi. The Nippon Individual Savings Account (Nisa) is a state-funded program that has enabled individuals to build wealth tax-free in capital markets since 2014.

It aims to turn the Japanese into a nation of investors and has been significantly reformed in 2024. Now, over a quarter of the Japanese population is involved in the program. Opening a Nisa account is very easy, but only about 15 percent of people actively invest. Those who invest have primarily invested in local securities until now.

According to Ishihara, Japanese people are also increasingly investing internationally, such as in index funds on the S&P 500 or the MSCI World index, which is also popular in Switzerland. Young people start investing early, which is also due to the fact that they have not experienced any market crises. "They believe that stocks only increase in the long term," says Ishihara.

Older individuals, who have experienced recessions such as the collapse of the real estate bubble in the early 1990s, the 2008 financial crisis, or the Fukushima nuclear accident, are more cautious and prefer to keep their money in the bank. "Many older Japanese keep their cash at home physically," says the investment expert. They apparently have no intention of changing this.

In 2022, new banknotes were issued in Japan, hoping that these large cash reserves would be invested. However, this has not happened. The reluctance of many Japanese is also due to low financial literacy. There is hardly any formal financial education, says Ishihara. Younger generations acquire their knowledge about the stock market mainly through self-study or social networks, especially through Japanese financial influencers on YouTube.

That investing does not come naturally to many people is also due to decades of deflation that the country has experienced since the end of the bubble economy. Real interest rates were long negative. This made holding cash attractive because purchasing power was not eroded by inflation. Since Japan began to feel inflation again in 2022, people have had difficulty adapting.

"I spent my first 20 years in Japan and never experienced inflation," says Ishihara. It was only when she moved to Australia that she first learned that prices can also rise. In the last three years, although private consumption has risen, it has not yet attracted: "If food becomes more expensive, I have to save somewhere else," says Ishihara.

This is the Japanese mentality. Sparseness and risk aversion are deeply embedded. It takes time for people to dare to start doing something with the money lying in the savings account, even if it loses value due to inflation. Even though the current cycle of rising interest rates is considered normalization, there is still a long way to go until people trust doing something with the money lying in the savings account, even though it loses value due to inflation.

Even if the Bank of Japan ended the period of negative interest rates in March 2024 and subsequently raised the benchmark interest rate to 1.25 percent, Japanese stocks continue to rise. Despite the rising interest rate environment typically being unfavorable for riskier investments, Japanese companies and their stocks are currently benefiting from significant domestic investments promoted by the government led by Prime Minister Sanae Takaichi.

Due to three decades of deflation, the country has invested far too little in all areas and faces a serious labor shortage and outdated infrastructure. Besides the government, companies are also showing a high willingness to invest and have a large amount of idle capital. Japanese companies held a lot of cash on their balance sheets and could often finance themselves without the help of banks, observes Ishihara.

However, in recent years, a shift in mindset among companies has occurred. Tokyo Stock Exchange and other organizations have initiated reforms to make Japanese companies more attractive to investors. Listed companies are now expected to use their capital efficiently instead of hoarding it. This has led to record-high investments in Japanese companies.