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Finance

Japan's tax-free investment accounts seen topping 10m in fiscal 2015

TOKYO -- The number of NISA tax-free investment accounts in Japan is expected to break 10 million this fiscal year, just over two years after the program's launch, with recent growth indicating that rough market conditions have not hurt individuals' appetite.

     A total of 114,000 people opened accounts at four major banks and 10 brokerages in January and February, a Nikkei Inc. survey shows. NISA accounts at these firms amounted to 5.98 million at the end of February, making up 60% of the more than 9.98 million across all financial institutions.

     Money in NISA accounts more than doubled in 2015 to 6.4 trillion yen ($57.2 billion). Investment has remained solid this year despite appreciation by the yen and a stock downturn stemming from the Chinese economic slowdown and slumping oil prices. A total of 570 billion yen was invested through NISA accounts at 10 leading brokerages in January and February, up 28% on the year, according to the Japan Securities Dealers Association. The average amount invested rose by 20,000 yen to reach 490,000 yen.

     Retail investors bought roughly 1.15 trillion yen more in shares than they sold from the start of the year to March 11, Tokyo Stock Exchange data shows. They snapped up shares whose dividend yields jumped as stock prices plunged.

     Blue chips with high dividend yields and flagging bank stocks were popular choices among NISA account holders, according to Daiwa Securities. The cap on tax-free investment rose from 1 million yen to 1.2 million yen this year, drawing more money.

     Although the government aims to use the NISA program to spur a shift from saving to investing, individuals are still largely steering clear of risky assets. Stocks account for about 5% of household financial assets, while cash and equivalents make up more than half, according to the Bank of Japan.

     The program has other issues as well. Only 46% of NISA account holders invested anything through their accounts in 2015, about the same proportion as in 2014. And more than half of account holders are 60 or older. Broader adoption by young people in their 20s and 30s, a demographic less familiar with securities investing, is crucial.

     Japan will launch a Junior NISA program for minors in April. This will let parents or grandparents invest up to 800,000 yen a year tax-free, which should encourage the transfer of wealth to younger generations. Although the NISA program will end in 2023, the securities industry is pushing the government to make it permanent, a measure the Financial Services Agency is expected to consider.

(Nikkei)

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