From savings to the stock market… Japanese MZ generation turns to investing

Korea Economic Daily

Summary

Japan's MZ generation is proactively engaging in investments such as stocks, bonds, and funds, resulting in a substantial increase in the proportion of investors in their 20s and 30s.
Japan’s ongoing stock market stimulus policies and expansion of tax benefits have promoted the asset growth of younger generations.
These changes have led to an 83.8% increase in Japanese households’ stock and fund holdings since 2020.

The road to becoming a pension-advanced nation

Expansion of stock market stimulus and tax benefit policies

Number of investors in their 20s triples in 8 years

A generational shift is sweeping among Japanese stock investors. At the center stands the MZ generation. Unlike their grandparents, who were focused on real estate, or their parents, known as the 'savings generation', they boldly invest their surplus funds in stocks, bonds, and funds. The Japanese government is also supporting the MZ generation’s asset growth through various stock market stimulus initiatives and tax incentives.

According to the Japan Securities Dealers Association and the Investment Trusts Association on the 11th, the proportion of Japanese individuals in their 20s investing in securities (including bonds and funds) jumped from 10% in 2016 to 31% last year. For those in their 30s, it grew from 14% to 33% in the same period. As young people have turned their attention to the stock market, Japanese households' holdings of stocks and funds surged from ¥253 trillion in 2020 to ¥465 trillion at the end of last year—an 83.8% increase.

The Japanese government’s stock market stimulus measures have also played a role in drawing young people into the stock market. Spanning three prime ministers—Shinzo Abe, Fumio Kishida, and Shigeru Ishiba—efforts to boost stock market value have resulted in the Nikkei 225 Index surpassing its bubble economy peak last February after 34 years.

In January last year, the Japanese government significantly expanded the tax benefits of the 'New Small Investment Non-Taxable Scheme' (NISA) under the “Asset Income Doubling Plan” designed to double citizens’ retirement assets. The reasoning is that vibrant participation by youth in stock investments invigorates the market and leads to higher pension returns, ultimately enriching their retirement years.

Tokyo= Choi Man-soo / Na Su-ji, journalists bebop@hankyung.com