Half of New NISA Investments Went to Japanese Stocks

REUTERS/Issei Kato
Visitors and electronic screens displaying Japan’s Nikkei stock quotation board are reflected on window glasses as the share average surged past an all-time record high scaled in December 1989, inside a building in Tokyo, Japan February 22, 2024.

Tokyo (Jiji Press)—Nearly 50 pct of investments made through the new Nippon Individual Savings Account, or NISA, program went to Japanese stocks from January through March, a survey has shown.

During the quarter, the Nikkei 225 stock average rewrote its record high for the first time in 34 years and rose further to top 40,000.

The new NISA tax exemption program for small-lot investors allowing bigger tax-free investments began in January, replacing the previous NISA program.

According to the Japan Securities Dealers Association survey of 10 major traditional and online brokerages, including Nomura Securities Co. and SBI Securities Co., domestic stocks accounted for 47 pct of the purchases placed via the new NISA program between January and March, just shy of 50 pct for investment trust funds.

“The amount bought via NISA was more than three times the year-before level,” Daiwa Securities Co. Managing Executive Director Kotaro Yoshida said, explaining moves by NISA account holders at the company.

“About 80 pct went to stocks and 20 pct to investment trust funds, and most of the stock investments went to Japanese stocks,” Yoshida added.

Stocks with stable and high dividends were especially popular.

Japan Tobacco Inc., which plans to pay an annual dividend of ¥194 per share for 2024, was the most popular investment destination among NISA account holders at SBI Securities, according to the online securities giant.

Nippon Telegraph and Telephone Corp. came next, followed by Mitsubishi UFJ Financial Group Inc., SBI Securities said.

In March last year, the Tokyo Stock Exchange asked TSE-listed companies to pay more attention to capital efficiency and stock prices. This led to an increase in companies focusing on shareholder returns including dividends.

Meanwhile, some investors are bearish about Japanese stocks, because Japan’s market is considered likely to shrink as the population decreases, unlike markets of other countries including the United States, which has many powerful high-technology companies.

Among holders of the new NISA accounts, investment trust funds mainly investing in overseas stocks are very popular. Many market players are concerned about an “outflow of household funds to other countries.”

Ryohei Kobayashi, a popular YouTuber who teaches investment know-how to beginners, recommends investing in foreign stocks.

Kobayashi said he will be able to think positively about investing in Japanese stocks if the country “deals with labor shortages by actively accepting immigrants and using artificial intelligence systems.”