Retail investors who’ve been pouring savings into overseas stocks and funds are expected to accelerate their purchases in 2024 — driving selling of the yen in the process — when the government permanently removes taxes on dividends and trading profits on a highly popular form of investment account for individuals.
The value of foreign shares and investment-trust funds in NISA accounts has risen at an average annual pace of more than 30% since 2015, based on a Bloomberg analysis of public data. “The NISA expansion will surely boost portfolio outflows and investors making regular contributions into foreign assets may result in continuous yen selling,” said Tsuyoshi Ueno, a senior economist at NLI Research Institute in Tokyo. “Low growth expectations and low yields locally mean money is more likely to flow out of Japan.”
Japanese investment trusts have preferred foreign equities over local ones in recent years, which reflects a falling home bias among domestic investors, Shusuke Yamada, a foreign-exchange and rates strategist at Bank of America, wrote in a research note this month.