Japanese Investors by Retail Trading by Reducing Barriers for Investing

The Japanese Tokyo Stock Exchange asks on the company list to reduce its minimum investment thresholds to attract smaller retail.

The current recommendations believe that companies retain minimum investments below $ 500,000 ($ 3,500). Now TSE hopes to reduce this to 100,000 yen.

This step is aimed at facilitating a variety of investor circles to invest in individual shares, which stimulates the development of the Japanese economy, a group formed TSE consisting of market experts A report published on Thursday.

“TSE will create an environment that promotes investment for a diverse range of people, including young people,” the report added.

Foreign investors own about 32% of the Japanese stock market, and domestic investors occupy 16.9%, Recent TSE data in 2023 showed. Financial institutions account for 28.9% of the domestic stock market, and the rest is divided between securities companies, business corporations and government structures.

The move notes the complete cancellation of the government’s attitude, said the senior manager of the UBP Investments Zuhair Khan.

Historically, Japan had extremely bureaucratic processes around the registers of shares and shareholders, Khan explained. They grew their heads through the papers and the exchange of snails, which required a significant manual input and storage of paper documents, which led to high costs.

“High investment levels were one way to reduce the cost of manual processing and load,” he said CNBC. “In addition, the government mainly preferred institutional investors over retail.”

Ghosts from the past are also delayed. Japanese price bubbles at the end of the 1980s, which were fueled by light monetary policy and speculative investments, led to the price accident since the 1990s and a long period of economic stagnation.

“After the bubble break, the Japanese had a great disgust and considered the investment on the stock market as gambling. Younger Japanese do not have such disgust. The government wants to ease these young investors,” he said CNBC.

But Japan is not just young investors.

Japanese pensioners average 20 million in their accounts to retire conveniently, Khan added. Instead of the government filling this gap, Japan encourages households to save and invest more in retirement.

“Many elderly wealthy Japanese are reluctant to return to their market after the fall of the 1990s, and the high minimum investment units of large companies such as Keyence are an additional obstacle to them,” said Richard Kay, a portfolio manager specializing in Japanese shares.

According to the volume of trade data from TSE, foreign investors traded 20 billion shares in the main Prime market In the period from 7 to 16 AprilWhile locals traded 10 billion.

The locals, the main beneficiaries of the smaller minimum investment units, are significant and can be an important “scale factor” in growth when they decided to go out and buy with incentives such as cheaper investment units, Kay added.