A glimmer of hope in Japan

The Japanese stockmarket still hasn't recovered from the collapse of the bubble in 1989. Last month it slid back to a level not seen since the mid-1980s, although it has gained a fifth since then, in line with global indices. A precondition for a lasting rebound is the return of retail investors, who owned about a third of the market in the 1970s but by last year accounted for less than 20% of it. On that front there is now a glimmer of hope.

In 2008, for the first time in 18 years, Japanese retail investors finished the year having bought more shares than they sold, says The Economist. New accounts at Monex, the top online broker, doubled in the final quarter of 2008. "The trend is not nearly powerful enough to call a market bottom." Overall trading activity has not increased, reflecting ongoing caution, and the difference between seller and buyer numbers is small, so a small shift can tip the trend.

Note that retail investors own assets worth $15trn, half in cash and bank deposits, and earning money from savings is becoming increasingly important as the population ages and shrinks. And stocks look enticing, given that they are trading below book value and yielding a historically mouth-watering (by Japanese standards) 2.7%, against short-term interest rates of around 0%. When retail investors come back, "the potential is huge".

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