Japanese investors are sinking their money overseas at the fastest rate in three years amid concern about minuscule interest rates and a sluggish domestic economy.
Foreign assets held in Japanese mutual funds reportedly surged 31 percent in January and 25 percent in February from a year earlier, according to the Investment Trusts Association of Japan.
Much of the investment comes from older people trying to finance their retirement.
“The number of elderly people considering a financial exodus from Japan is on the rise,” Soichiro Mori, a strategist at FXOnline Japan Co., told Bloomberg.
“They’re preparing for the future by shifting money away from their home turf.”
About 40 trillion yen ($445.56 billion) of savers’ deposits at Japan Post Bank may mature this year, the most since 2001, according to Nikkei Needs data.
With the bank’s interest rate on long-term deposits now at 0.11 percent, Japanese investors will inevitably place their funds elsewhere.
“Money is poised to move out of Japan because investors don’t have a choice,” Naoyuki Ichikura, a manager at the Trusts Association, told Bloomberg.
“Those who have a good chunk of money have nowhere to invest.”
Institutional investors are bolting too.
Japanese corporate pension funds cut their domestic share weightings for the fourth straight year in the 12 months ended March 31, according to the Pension Fund Association.
They’re bolting because of the low returns on Japanese stocks, Reuters reports.
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