Conservative Japanese Investors Start To Feel Love For Taking More Risk

Tom Burroughes

6 June 2013

Japan’s high net worth investors who have sought the relative – if low-yield – safety of yen deposits after the financial crisis are becoming more tolerant of risk and eyeing foreign currencies and bonds, a news report on wealth managers’ views said.

Speakers at the Reuters Global Wealth Management Summit said Japanese investors, with $16 trillion in household assets, have started to shift out of low-yielding deposit accounts.

"High net worth individuals will be shifting into growing areas overseas once it is clear that the (global) economy has started picking up," Hiroyuki Miyamoto, a senior consultant at Nomura Research Institute, was quoted by Reuters as saying.

"Funds will be allocated to overseas markets, but they will look for products which they can easily pull out of ... having learned from the experience of the financial crisis,” Miyamoto said.

Investment trusts, for example, have been net buyers of foreign securities since April and have made cumulative net purchases of Y2.5 trillion in the first nine months of 2009, three times the net buying for all of last year, the news service reported. That amount is dwarfed, however, to peak buying of Y5.7 trillion yen in 2007, before financial markets crashed.

One of the reasons why foreign assets are liked is due to a lack of credible alternatives at home in Japan, the report said.

"Political uncertainty about Japanese politics is clearly one of the key reasons why Japanese stocks are lagging behind stocks in other markets," Oki Matsumoto, chief executive of Monex Group, the large Japanese online broker, was quoted as saying.

HSBC, which has opened seven branches in Japan to offer its Premier service targeting those with more than Y10 million yen in liquid assets, expects clients to remain conservative but still eager to invest overseas, the report said. "There is still a preference to invest in yen deposits, but there's equally a strong preference to invest in deposits of foreign currencies as well," Godfrey Swain, head of HSBC personal finance services in Japan, reportedly said.