Japan needs to learn to invest now

The biggest story in Japan was about a man who mistakenly received an entire town’s $360,000 allotment of Covid stimulus money — and chose to gamble it all at an online casino rather than invest.
That’s at the heart of an issue once again on the national agenda: Getting the Japanese to put their substantial amount of spare cash into higher-earning assets. Earlier this month, Prime Minister Fumio Kishida announced that he aimed to double the country’s income by facilitating a “bold and fundamental shift from savings to investment.”
Forgive experienced international investors for yawning: They’ve heard this one before. The very slogan “from savings to investment” is nearly 20 years old, having been the motto of a 2003 campaign to encourage a shift of assets out of underperforming cash deposits. That campaign was, to say the least, unsuccessful. The number of people holding securities has barely budged in the past two decades. Not even the doubling of Japan’s Topix index during the Abenomics era helped get retail back onboard. While slightly more of the population seem to think investing is needed, two-thirds still say it’s not……and interest in assets outside of cash is growing only slowly.
These days, Japan’s retail investors feel less influential than ever. References to “Mrs Watanabe,” the proverbial investing housewife, are growing increasingly rare.
Market turmoil makes it an especially tricky time to attract investors who can remember stories of people left holding the bag after Japan’s asset-bubble collapse.
Compare that to neighbouring South Korea, where retail investors are so important that the leading candidates in the recent presidential election made electoral promises to woo them. In China, the sway of the individual investor is legendary.
While in the US, Robinhood Markets Inc. was the talk of the pandemic as people stuck at home gamified betting on stocks. In Japan, people took to betting on online horse races instead.
It’s not as if Japan’s retirees don’t need to grow their nest eggs: There’s a growing gap between pension payouts and increasing living costs. That’s hardly going to improve as
the working population shrinks. But there’s a lack of clarity about government policies. Kishida promises to expand Japan’s system of tax-free investment accounts as well as creating a “new mechanism to encourage citizens to move their savings into asset management.” No one’s quite sure what that means.
There’s a lot of reason to be wary of “this time it’s different” talk in Japan. But one thing really is: inflation.

—Bloomberg