Japan's household financial assets top ¥200 trillion for the first time

The Bank of Japan (BOJ) released data on October-December 2021 money circulation statistics (flash report) on March 17, showing that Japanese household financial assets increased by 4.5% year-on-year to 2023 trillion yen (about 108 trillion yuan) by the end of December 2021, surpassing 200 trillion yen for the first time and increasing for the seventh consecutive quarter. Under the new crown epidemic, personal consumption continued to be suppressed and cash deposits increased, in addition to the year-end bonus payment also became a factor pushing up financial assets.

In terms of the specific composition of household financial assets, cash deposits increased by 3.3% year-on-year to ¥1,092 trillion (about RMB 58 trillion), the largest amount, followed by insurance-pension-fixed insurance at ¥540 trillion. from October to December 2021, the epidemic in Japan was under control and the restrictions on movement were temporarily relaxed, but household consumption did not recover sufficiently and cash deposits increase.

Japan's household financial assets top ¥200 trillion for the first time

The rise in stock prices and the depreciation of the yen have also increased individuals' financial assets. The balance of stock holdings rose 15.5% year-on-year to ¥212 trillion, and investment trusts rose 20.4% year-on-year to ¥94 trillion. At the end of December 2021, the Nikkei average share price was 28,791 yen, up 4.9% year-on-year, and the yen exchange rate was at around 115 yen per dollar. Household investors holding investment trusts and foreign bonds benefited.

The popularity of investment trusts with foreign stocks such as those in the U.S. is increasing every year. According to the Japan Investment Trust Association, the total net assets of overseas stock investment trusts reached approximately 19 trillion yen at the end of 2021, an increase of more than 7 trillion yen from the previous year. The U.S. stock market, which has remained firm, has driven the popularity of overseas stocks.

In addition, financial assets held by companies rose 5.9% year-on-year to ¥1279 trillion. Cash deposits rose 3.9% year-on-year to 319 trillion yen, and direct investment abroad also rose 15.7% year-on-year to 168 trillion yen.

In terms of overall financial market holdings of Japanese government bonds, Japanese banks held the highest percentage at 530 trillion yen, or 43.4%. Although the holdings themselves decreased by 2.9% year-on-year, the proportion was still prominent. Banks and other depository institutions hold 13.4% of JGBs, and 14.3% of JGBs are held overseas.

As we enter 2022, personal consumption weakens and cash deposits are likely to increase further. in January, Japan again imposed movement restrictions and reduced consumption opportunities due to the resurgence of the New Crown epidemic. The deterioration of the situation in Ukraine is also likely to have an impact on consumer psychology through price increases, etc. Financial assets such as stocks and investment trusts are likely to shrink due to the worldwide decline in stock prices since the beginning of the year.

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