The entrance of the Tokyo Stock Exchange (TSE) in Tokyo, Japan, on Monday, August 5, 2024.
Noriko Hayashi | Bloomberg | Getty images
The Tokyo Stock Exchange of Japan is asking the companies from the list to reduce their minimum investment thresholds to attract smaller retail investments.
Current guidelines suggest that companies maintain the minimum investment below 500,000 yen ($ 3,500). The TSE now expects to reduce that to about 100,000 yen.
The measure aims to facilitate that a variety of investors invest in individual shares, thus stimulating the development of the Japanese economy, a group formed by the TSE composed of market experts in a report published on Thursday.
“TSE will create an environment conducive to investment for a variety of people, including young people,” the report added.
Foreign investors have about 32% of the Japanese stock market, while national investors have 16.9%, the most recent TSE data showed in 2023. Financial institutions represent 28.9% of the national stock market, while the removal is divided between the companies of securities, commercial corporations and government entities.
The measure marks a complete reversal of the attitude of governments, said Senior portfolio manager of UBP Investments, Zuhair Khan.
After the burst of the bubble, the Japanese had a high -risk aversion and considered that investing in the stock market is similar to the game.
Zuhair Khan
UBP investments
Historical, Japan had explained the bureaucratic processes around the trade of shares and the records of the shareholders, Khan explained. These raised their heads through mail and mail exchanges, which required a considerable manual entry and storage of paper documents, the result of high costs.
“Establishing high levels of investment units was a way to reduce the cost and manual processing load,” he told CNBC. “In addition, the government used to strongly prefer institutional investors in retail trade.”
The ghosts of the past also persist. The pricing bubble of Japanese assets at the end of the 1980s, fueled by an easy monetary policy and speculative investments, led to an accident in the prices of assets of the 1990s and a prolonged period of economic stagnation.
“After the burst of the bubble, the Japanese had a high -risk aversion and considered investing in the stock market as similar to the game. The younger Japanese do not have such aversion. The government and TSE want to facilitate the investment of COSE.”
But they are not just the young investors that Japan is courting.
Japanese pensions have an appraisal deficit or 20 million yen in their accounts to retire comfortably, Khan added. Instead that the government fills this emptiness, Japan is encouraging homes to save and invest more for retirement.
“Many older rich Japanese are reluctant to return to their own market after the falls of the 1990
According to the volume of negotiation data of the TSE, foreign investors quoted 20 billion shares in the main main market between April 7 and 11, while local people quoted 10 billion.
Local people, the main beneficiaries of the smallest minimum investment units, are significant and can be an important “growing” growing factor if they choose to leave and buy with incentives as cheaper minimum investment units, Kaye added.