National Australia Bank’s (NAB) latest online survey of high-net-worth individuals (HNWIs shows 72% of Japan’s affluent are actively investing and growing their wealth.
About two thirds or 65 per cent HNWIs say they have more than ten years of investing experience (see Graph 2). And these investors start early, with about 80 per cent of HNWIs in their 40’s have been actively investing for at least five years.
General Manager for National Australia Bank, Tokyo Branch Kohei Tsushima, says with Asia’s quick economic expansion bolstering the numbers of HNWIs in this region, it is important to understand the investment patterns and motivations of Japan’s wealthiest investors.
The survey, which canvassed over 500 people, also shows that while Japanese equities remain the investment tool of choice for over 77 per cent surveyed, foreign currency deposits come in second with four in ten HNWIs investing in them (see Appendix Graph 3).
The results also reveal that investors with global portfolios have a more positive outlook on their returns, compared to those holding only domestic investments. When asked if they are successful in growing their assets, 20 per cent of investors with global portfolios say they are "very successful" compared to 15 per cent of investors with only domestic investments.
Unlike domestic investment instruments, overseas real estate did not rank in the top four investments for HNWIs. However, one in ten investors with global portfolios express a desire to invest in overseas property.
Commenting specifically on the results, Tsushima-san adds, "Whilst it is not surprising that high-net-worth Japanese investors with global portfolios are happier with their investment returns, it is surprising that relatively few of them choose to invest in overseas real estate assets, particularly compared to Chinese high-net-worth investors who have been very active investing in real estate in every major market in the world.
"There are opportunities for Japanese investors in overseas real estate to leverage the considerable differences between property cycles in Japan and overseas markets, such as Australia, to achieve better yields," he says.
The survey also found that one in four investors with domestic assets are interested in diversifying their portfolios to include overseas investments. Almost half say they are motivated by the earning potential of forex profits while four in ten domestic investors feel that overseas investments will bring better returns.
Commenting on this insight, Tsushima-san says, "Japanese investors should think twice about having a non-diversified portfolio as this can lead to increased risk and less opportunity. Fortunately, for HNWIs with portfolios heavily weighted towards Japanese markets, it is now easier than ever to diversify with banks offering foreign currency deposits and overseas property financing."