Few investment options in Japan
By Yuri Kageyama
Associated Press
TOKYO — With the Tokyo stock market at 20-year lows and urban land prices crashing to a third of what they were a decade ago, the Japanese are trying to find new places to put their money.
It's a huge problem for the world's most conscientious savers, who have put aside $12 trillion in personal financial assets. The Japanese have never been very trusting of stocks, and are certainly less so given the market's dismal performance. Banks are paying only minuscule amounts of interest. And the long-held belief in land as a safe-haven investment has been shattered.
But people have found what they believe are more secure places for their money. One is the bond market, where there's a promise of getting their principal back. For some, another option is to just hold on to their cash — even to the point of locking it up in a safe.
Sagawa, a Tokyo vault maker that did most of its business with corporate clients just a few years ago, is seeing business edge up with individuals.
"People are worried about security," company spokesman Akira Fujii said.
Stashing away cash in a safe might seem drastic, but the collapse of stock and land prices has made already conservative investors even more cautious.
"My worst mistake was to buy stocks," says Eishi Tanaka, a 65-year-old retired businessman. "I have to get rid of my stocks."
Japanese have always tended to look upon stocks as a big gamble. The people in this country who own stocks are estimated at about 7 million, or a mere 5.5 percent of the population, according to the Japan Institute for Securities Information and Public Relations, a research agency in Tokyo.
But there were many others in the market before the meltdown in Tokyo share prices set off by worries about global economic growth and a slowdown at home. In the last two years, the Nikkei Stock Average, the Tokyo market's benchmark, has lost about half its value, recently dropping below 7,800 points to a 20-year low.
Now, many people won't go back into stocks, and the other investment options aren't looking much better.
While banks still remain the favorite place for many Japanese to put their money, interest rates have been at near-zero for years.
Meanwhile, Japanese land prices declined for the 12th straight year in 2002, according to government figures.
Hikoroku Saiga, an accountant who advises people on investments, says Japan is having a tough time adjusting from a "bubble" era, when land led to certain riches, to a period of deflation.
"Japanese generally tend to be bad investors," Saiga said. "We are the kind of people who like to hoard and cling to our assets."
But they are willing to try their luck with government bonds, which they consider safer than stocks, although the interest on bonds that went on sale in February is a meager 0.05 percent.
The Finance Ministry is planning to sell $12.5 billion in bonds targeting individual buyers this fiscal year.
Stock ownership in households nationwide has plunged by more than 40 percent to $432 billion from $765 billion three years ago, Bank of Japan data show. During the same period, bonds doubled to $108 billion from $56 billion as a destination for investment.
With such hesitance among Japanese, brokerages are hunting for new breeds of potential investors, such as single working women who are believed to possess hefty disposable incomes.
Tokai Tokyo Securities Co. started a Web page called "A Maiden's Wallet" that tries to lure young women with cooking recipes and movie reviews along with stock information.
But Japanese are going to stick to what they see as safe, such as bank savings and government bonds, for some time, says Takahiro Tsuchiya, economist at Daiwa Institute of Research in Tokyo.
"There is little incentive for stock investments," Tsuchiya said. "People don't buy stocks to make them go up. They buy only because there's hope stocks will rise."
