Individual ownership of Japanese shares lowest since fiscal 2007
TOKYO -- Individuals accounted for less than 20% of all stockholdings in Japan on a value basis, the first time the ratio has fallen below 20% since fiscal 2007, according to the 2013 Shareownership Survey released by the Tokyo Stock Exchange and other security markets on June 19.
Individuals held 18.7% of shares as of the end of March, down 1.5 percentage points on the year. The ratio declined for the second straight year to its lowest point since fiscal 2007, and fell at the quickest pace since fiscal 1986. The total number of individual investors dropped for the first time in two years to 45.75 million, while the fall in the number of stockholders -- 210,000 -- was the largest since comparable data became available in 1985.
Youth over experience
Newly listing companies gained shareholders, adding a net 560,000 individual investors; issues that had share splits or reduced the minimum investment unit gained 650,000 individual shareholders.
On the other hand, companies that delisted saw a net decline of 540,000 individual investors. Other factors accounted resulted in a decline of 880,000 individual shareholders.
The decline in individual ownership is due in large part to the sharp rise in share prices driven by overseas buyers and individuals cashing in paper gains. The Nikkei Stock Average rose 20% in fiscal 2013. "A surge in stock prices prompted many profit-taking sales," said a TSE official. Many individuals also unloaded stocks before the end of a tax break on the sale of securities at the end of last year, further pushing down the proportion of shares held by individuals.
Individual investors' net sales rose to about 7 trillion yen ($67.9 billion) in fiscal 2013, a record high, rising sharply toward the end of the year. In both November and December, small investors sold a net of around 2 trillion yen of stocks.
Machinery companies saw the largest drop in individual shareholdings, falling 3 percentage points to 18.8% of the total. Banks saw a 2 percentage point fall in the ratio of individual shareholdings to 16.4%.
Enter the foreigner
Across all industries, the ratio of shares held by foreign investors topped 30% for the first time. The rise was sharpest in precision instruments, with the overseas shareholder ratio jumping 6 percentage points. This underscores the fact that overseas investors are buying stocks previously held by Japanese small investors and financial institutions.
Although individual investors make up a smaller proportion of all shareholders, "their ability to invest increased significantly, due mainly to the last-minute stock sales before the tax-system change and the lock-in of profits from higher stock prices," said Hirofumi Inada at Okasan Online Securities.
Others say the decline in individual share ownership is temporary, thanks to the NISA program, Japan's version of Britain's individual savings account system, personal investment account system launched in January. "Individuals' money will return again to the securities market, including through investment trusts, as awareness grows about Japan's fight against deflation," said Toshihiko Tatsuzawa, head of investment information at Nomura Securities.