Japan Regulator Urges Financial Firms to Calm Anxious New Investors, Reports Reuters

New Head of Japan’s Banking Regulator Encourages Support for Retail Investors

By Miho Uranaka and Anton Bridge

Tokyo – The newly appointed head of Japan’s banking regulator has urged financial firms to provide reassurance and education to inexperienced retail investors. This call to action comes in the wake of significant market fluctuations experienced this week that have heightened investor anxiety.

Hideki Ito, Commissioner of the Financial Services Agency, emphasized the importance of addressing the concerns of retail investors, especially in light of the government’s initiative to encourage the allocation of more of Japan’s $15 trillion in household assets into investments.

Under the leadership of Prime Minister Fumio Kishida, the government has revamped tax-free NISA accounts starting this year. Changes include increased annual contribution limits and making certain balances permanently tax-exempt, which has led to a notable rise in the number of NISA accounts opened this year.

The Tokyo market experienced a dramatic 12.4% drop on Monday, marking it as the second-largest decline in its history. This downturn triggered alarm among retail investors, with many brokerages receiving an influx of inquiries on Tuesday as trading resumed.

This incident was also the first major market upheaval since the modifications to the NISA program. As of March, there were approximately 23 million NISA accounts with around $267 billion invested.

Ito asserted that financial institutions should carefully engage with clients, particularly those who have newly opened NISA accounts and may be feeling anxious. He highlighted the importance of educating investors on the advantages of long-term, diversified investment strategies through historical data.

Since taking office in July, Ito has indicated that the regulatory body is committed to enhancing financial and market literacy across Japan. Kishida aims to double household investment income to reduce reliance on the public pension system as the nation faces an aging population.