February 20, 2014 4:29 am JST

Japan individuals pocketed 5 trillion yen in capital gains in 2013

TOKYO -- Retail investors in Japan likely earned more than 5 trillion yen ($48.3 billion) in capital gains on stocks and investment trusts in 2013, helped by the rise of domestic stocks and the decline of the yen.

     The Nikkei estimated the figure using tax payment data obtained from brokerages where individuals create investment accounts to trade shares and investment trusts. Many people choose accounts from which taxes are automatically withdrawn by brokerages handling the payment.

     At five major securities firms including Nomura Securities, and five Internet securities companies such as SBI Securities, the combined tax payment likely amounted to nearly 500 billion yen. Based on the 10% tax rate last year, capital gains are estimated at nearly five trillion yen, almost 12 times larger than in 2012.

     The overall capital gains for individuals in Japan, including those not covered in the data, most likely exceeded 5 trillion yen. Based on the historical data, the gains last year may have topped even that of the late 1990s, during the information technology bubble.

     Last year, the Nikkei Stock Average jumped 57%, pushing up the values of shares and investment trusts targeting equities. And the expiring of tax benefits at the end of the year prompted many investors to unload assets to lock in profits before the tax rate went up, another factor that likely pushed up individuals' capital gains.

     Thus, individuals rich in cash are now more willing to take risks. "Customers' investment appetite is strong," says Toshio Araki, an executive at kabu.com Securities. "They are once again gradually increasing investment, buying on the day share prices fell."

     In January, Japanese retail investors bought 1.42 trillion yen more in shares than they sold, logging a record net buying for a single month. Their net purchases of investment trusts came to 1.3 trillion yen. And bullish buying has not lost steam this month.

     The positive effect is also seen in increased consumer spending, as more people shop for luxury items at department stores and elsewhere, bolstering earnings at firms dependent on domestic demand.