Japan Household Investors Embrace Risk as Stock Holdings Soar

(Bloomberg) -- Stocks are finally getting some love from deep-pocketed Japanese retail investors, traditionally housewives, who run the family finances and tend to be risk averse.

Households held 10.7 percent, or 198 trillion yen ($1.7 trillion), of their assets in equities at the end of September, according to flow of funds data released by the Bank of Japan this week. This is the highest level since the 11.5 percent mark reached in 2007, before the global financial crisis. The total value of their equity holdings also reached a decade-high thanks to the rise in Japanese equity prices over the past few years.

Retail investors have been putting more and more of their wealth into equities since the allocation level hit a low of 5.9 percent in September 2010. This compares with a modest decline in holdings of cash and deposits since then. Households held 51 percent of their total assets in cash and deposits as of September, versus 54 percent in September 2010.

Analysts say the renewed interest in equities from retail investors could give Japan’s stock market another boost following this year’s rally. Both equity benchmarks are trading around their highest levels in a quarter century, though momentum has cooled as fewer participants are trading during the year-end holiday season.

©2017 Bloomberg L.P.