TOKYO: Japan’s stock rout has rattled novice individual investors who joined the market following the launch of a revamped tax-exempt investment program in the country this year.
These newcomers, who are concerned about the possibility of further stock price declines, are facing the challenge of whether to continue investment.
Japan’s benchmark Nikkei 225 stock index tumbled 2,216.63 points to 35,909.70 on Friday, its second-biggest point loss ever.
An online securities company was flooded with calls for inquiries from customers who wondered whether they should change their portfolios after the sharp drop in stock prices. Another online securities firm also received many inquiries asking when stock prices would rebound.The investment program called Nippon Individual Savings Account, or NISA, was expanded in January to allow bigger tax-free investments by small-lot investors.
The number of NISA accounts opened in 10 major securities firms as of the end of June jumped by about 30 percent from a year before to 15.2 million, according to the Japan Securities Dealers Association.
The Nikkei stock index had continued to rise since the launch of the new NISA program, hitting an all-time closing high of 42,224 on July 11. However, it has fallen by more than 6,300 points, or about 15 percent, in about three weeks, raising concerns about future stock prices even among professional investors.
Investment professionals are calling for individual investors who use NISA to build retirement savings not to be in panic.
“Long-term asset formation requires people to be determined to continue investment during a market downturn,” said Shingo Ide, chief equity strategist at NLI Research Institute.
“People who have started NISA for funds after retirement don’t have to pay too much attention to movements of stock prices on a daily basis,” Ide said. “We want you to continue investment thinking that the Nikkei index will be higher than 40,000 in several decades.”
JIJI Press