Japanese investors heading offshore following March 11

The president of Stasia Capital wrote about the recent changes in investment strategies made by wealthy Japanese and how the events of 2011 created a turning point in the mindset and actions of Japanese investors.

–Inward facing Japanese investors–

Over the past 20 years, private Japanese investors have been relatively wary of investing overseas, but in the past 2 ~ 3 years, private investors began to shift their funds overseas.

This is due to:

  • Japan’s stagnating economy
  • No increases in tax revenue
  • Increasing risk of economic collapse due to government bond issuance
  • A fall in the real estate market around the time of the Lehman Bros collapse

The current strong yen has provided an impetus to investors who are choosing to diversify their risk by investing abroad.

–The March 11 Tohoku Disaster–

Investors that held all of their assets in Yen were already concerned with the risk of losing the entire value of their assets in the event of a financial collapse, but the March 11 disaster added a new element – environmental risk. The Government’s treatment of the  disaster and the ongoing nuclear plant crisis led many to believe that they cannot depend on others to protect them, but must have their own protection plans in place. This kind of crisis awareness has started to grow amongst Japanese residents.

Stasia Capital regularly holds overseas investment seminars in Tokyo. In 2010, these monthly seminars would attract between 20 ~ 30 attendees, but from April, 2011, the number of attendees jumped to 100 per seminar. Real estate tours to Malaysia are held twice a month and they are now attracting as many as 30 participants. Sales from January to August, 2011, were already double the figure for 2010.

Although many wealthy Japanese already held vacation homes overseas prior to the disaster, the number of ordinary Japanese who want to invest offshore or even emigrate overseas is on the increase.

The reason for many wealthy investors to purchase property overseas was not only to diversify their investments but to also to diversify life-risk. Buying property in certain countries could provide residency or a long-term visa status. Japanese investors are now starting to recognize the value of these risk diversification strategies.

Japan Business Press, November 21, 2011.

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