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Stocks

Japan's tax-free investment accounts largely idle

TOKYO -- Less than 30% of individual savings accounts set up under Japan's tax-exempt investment program had actually been active as of the end of March, according to the Financial Services Agency. 

     By looking at the investing activity of Nippon Individual Savings Account owners at 10 major conventional and online brokerages, the FSA found that only 26.6% of account holders had used the accounts, investing 651,000 yen ($6,314) each on average, with the rest of the accounts sitting idle.

     The FSA's tallies from 686 financial institutions show that slightly more than 1 trillion yen had been pumped into markets through the program. But with so many accounts still inactive, the financial watchdog estimates that total investment will eventually reach 4 trillion yen in 2014.

     Under the scheme, modeled on the U.K.'s Individual Savings Account program, retail investors can buy up to 1 million yen a year of risk assets that are exempt from dividend and capital gains taxes.

     The British program has seen a rush to invest at the end of the fiscal year. A similar trend could hit Japan, as the unused tax-exempt amount does not roll over to the next year.

     In the first three months of 2014, program participants channeled 621.2 billion yen into investment trusts and 364.5 billion yen into listed stocks.

     Investors aged 60 or older were responsible for 65% of investment in value terms, and only 9% was attributed to those in their 20s or 30s. The FSA is considering measures to boost investment by younger demographics. The Japan Securities Dealers Association is calling for a program that would let parents or grandparents open the accounts in the names of minor children or grandchildren.

(Nikkei)

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