Japanese now hold 1,000tn yen ($8.8T) worth of foreign assets
Foreign assets held by Japanese institutional and individual investors appear to have topped 1,000 trillion yen ($8.79 trillion) for the first time, according to Nikkei estimates. The amount has increased roughly 50% during the past five years and now is more than twice as much as the country's gross domestic product.
The U.S. holds more external assets than any other country, $23 trillion worth, according to the International Monetary Fund. But in terms of growth, Japan is far-outpacing the U.S. and other leading economies. U.S. foreign asset growth came in at less than 10% over the five-year span. Foreign assets held by Germany and France shrank during the same period.
Securities seem to have accounted for nearly half of the 1,000 trillion yen that has escaped overseas. Japanese investors were holding 453 trillion yen worth at the end of June, up 100 trillion yen or so over the past three years.
Japanese investors are in the midst of a major shift -- pulling their cash out of domestic securities and placing it in overseas markets. They have been pushed to this collective decision by a hyper-aggressive Bank of Japan, which for more than four years now has been flooding the country's economy with so much yen that cash instruments can only earn negligible interest. A 20-year Japanese government bond, which typically earns more than shorter-term JGBs, now comes with coupons as low 0.6% or so a year.
By investment destination, nearly half of securities investments were directed to the U.S., while close to 30% went to Europe. Most direct investments were made in North America and elsewhere in Asia.
/Source: Asian Review/
Oct. 24, 2017