Japan's Nikkei 225 hits new record close, as other world markets advance

My daughter moved from Tokyo to the US, now earning in dollars. But she'll return to Tokyo to marry in December. She's lovin' that weak yen!

The bottom picture looks more like a "passerby"!

nice to see stock investors reaping profits while families deal with 25% price increases and can barely support a family with both parents working...

@Dango bong

Japan’s household financial assets are at a all-time high, while investing in the Nikkei and other share indexes as never been easier or cheaper, with plenty of tax protection. If those families decided to keep their savings in cash or life insurance rather than investing it, then it’s their fault they’re not benefiting.

JeffLeeToday  09:06 am JST

@Dango bong

Japan’s household financial assets are at a all-time high, while investing in the Nikkei and other share indexes as never been easier or cheaper, with plenty of tax protection. If those families decided to keep their savings in cash or life insurance rather than investing it, then it’s their fault they’re not 

Indeed. What is lacking is lack of education about investment. And also the generation that was burned with the burst of the the bubble will never invest anymore. Sad for them as their are the ones sitting on the most cash that will be eaten away by inflation.

Japan’s household financial assets are at a all-time high, while investing in the Nikkei and other share indexes as never been easier or cheaper, with plenty of tax protection. If those families decided to keep their savings in cash or life insurance rather than investing it, then it’s their fault they’re not benefiting.

This assumes that most families have surplus income that they are frivolously stockpiling in cash or low-return insurance policies.

No doubt that applies to some, but for a lot of people the rise in the cost of living coupled with a lack of increasing income to offset it means they don't have that surplus anymore. If people have to spend all of your income on housing, food and basic necessities then its hardly their fault that they aren't putting money they don't have into investment accounts that are benefitting from rising prices on the TSX.

@rainy

This assumes that most families have surplus income

Yeah, they kind of do, according to the stats (rather than your narrative):

"In 2023, the median amount of savings held by two or more person households in Japan amounted to approximately 11.1 million Japanese yen." -- Statista

https://www.statista.com/statistics/1235679/japan-multi-person-households-median-savings/

@rainy

This assumes that most families have surplus income

Yeah, they kind of do, according to the stats (rather than your narrative):

"In 2023, the median amount of savings held by two or more person households in Japan amounted to approximately 11.1 million Japanese yen." -- Statista

https://www.statista.com/statistics/1235679/japan-multi-person-households-median-savings/

I was talking about income, you reply with data about savings. These are different things.

Savings is an asset one accumulated over time. Income is a stream of money you receive measured on a regular basis (monthly, annually, etc).

As I said, for some people yeah your observation applies to them. Namely those who accumulated savings in the past which they still have. These are mostly older households. Most people under 50 in this country have nowhere near 11.1 million Yen in savings: https://www.nippon.com/en/japan-data/h00677/savings-shortfall-many-japanese-under-50-have-little-in-the-bank.html Mean savings for people in their 40s is about 2 million Yen, and its way less than that for people in their 30s or 20s.

For those people, income is important because they need enough of it in order to build savings in the first place. Thus the RATE of savings is the main determinant of how much they can save, and that is closely tied to income and inflation.

The data on the savings rate in Japan is dismal. The link you provided, whose underlying data is behind a paywall to me, doesn't seem to show that. The Japanese government's statistics bureau is a much better source. Here it is:

https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.esri.cao.go.jp%2Fjp%2Fsna%2Fdata%2Fdata_list%2Fkakei%2Ffiles%2F2023%2Ftables%2Fkakei_23q4.xlsx&wdOrigin=BROWSELINK

As you can see, the savings rate used to be pretty consistently at or near 10% in the 1990s. Over the past decade it has more typically been in the 0 to 2% range and even negative in some years. It spiked briefly in 2020 and 2021 due to COVID, but for the 2023 Calendar year has gone all the way down to 0.1% meaning the population as a whole saved almost zero last year. The data indicates this is almost entirely due to an increase in consumption (which in turn is the result of inflation forcing people to spend more of their income).

So if you've got a population where almost nobody under 50 has significant savings, and those same people have a savings rate of almost zero because they are faced with inflation, your message that they should stop keeping their money in cash and put it in investment accounts is absolutely useless. It would be good for retirees who are the ones who have most of the savings and yeah much of that is tied up in low-to-zero yield things.

Yeah, they kind of do (have surplus)

Don't you mean they actually, definitely, resoundingly do? Japan top the list of US treasury holding @$1.15 trillion, that's $9,200 per man, woman, child (for a total population of 125 millions). This is just for US treasuries, when you include Japanese treasuries, corporate bonds....it's much more rosy. Japanese are swimming in a sea of savings.

Education??? Mitsui was shouting from the roof top they are paying 5.3% interest for 12 months term deposit on USD denominated accounts last year. People who took it on would have got 11% returns currently given the weak yen.

My only concern is stocks are getting too expensive because of foreign pile on, and the leveraged stock portfolio will be priced out. IMHO, Japan goldilocks investing ciuld be a thing of the past...sooner rather than later, already Tokyo property value is out pacing income.

UAfan:

USD today TTB 160.47 should we be happy? or...what?

Definitely yes. When you compare the long-term trends of the Nikkei index and the USD/JPY exchange rate, you will clearly see a pattern showing that when the JPY goes down, the Nikkei goes up.

@rainyday

I was talking about income, you reply with data about savings.

And the story about the stock market. Households normally draw from their savings when they invest in stocks or other securities for retirement planning or education funding.

The link you provided, whose underlying data is behind a paywall to me, doesn't seem to show that. 

If you followed the financial press, you'd be well aware of the recent periodic reports based on govt statistics that Japanese households have a growing amount of financial assets that have hit the highest level in history.

True, inflation tends reduce the savings rate, but one needs to look at accumulated savings in this case. Japanese households continue to hold most of it cash (LOL) and life insurance!

If a significant number of households had reallocated that to moderate risk, diversified and tax protected securities from say around 15 years ago, Japan would be a considerably more affluent nation today.

@rainyday

I think you're confusing savings in bank vs hoards under the mattress or stashed offshore where interest is much higher. Survey conducted in Japan would also be rather biased as most Japanese don't like to flout wealth. Then there's the intergenerational wealth transfer....

My wife and I spend time in France for special occasions, we go to Marseille, Lyon, etc. but rarely Paris because it's expensive but when we do go to Paris, we see a lot of young Japanese enjoying the haute life in Paris.

Then there's the Mrs Watanabe (of course it's not just housewives, IMHO it's anyone that walks into a bank)

https://www.reddit.com/r/todayilearned/comments/15z89vf/til_mrs_watanabe_is_a_collection_of_thousands_of/?rdt=53464

If you followed the financial press, you'd be well aware of the recent periodic reports based on govt statistics that Japanese households have a growing amount of financial assets that have hit the highest level in history. 

Yes, this is because the stock market is high, and also because the availability of NISA and IDECO account have made investing much more popular and easy in recent years. Great for those who have already have savings they have invested in it. Not great for those who don’t.

True, inflation tends reduce the savings rate, but one needs to look at accumulated savings in this case. Japanese households continue to hold most of it cash (LOL) and life insurance! 

The data you cited doesn’t disagregate it by type - “savings” presumably includes not only cash deposits but also financial investments?

That aside, I’m aware that Japanese keep higher proportions of their savings in cash, but that is obviously changing. The number of people with IDECO accounts has risen sharply in recent years, and the switch from a deflationary to an inflationary economy over the past two years has created a much stronger disincentive to keep savings as cash.

If a significant number of households had reallocated that to moderate risk, diversified and tax protected securities from say around 15 years ago, Japan would be a considerably more affluent nation today.

I’m not disagreeing with you on that. But my simple point, which remains uncontradicted, has been that a very large proportion of the Japanese public do not have the ability to do so because the vast majority of those under 50 have almost no savings and, thanks to wage growth falling behind inflation, are unable to generate them. Savings are heavily concentrated in the older generation who had their working lives in a much different economy that allowed them to build them up in the first place.

So for those without the means to invest - which is to say most working age people these days - the rise in stock prices is of no benefit. This is not their fault, its the way the economy works right now.