Japan's NISA Program Set for Major Overhaul, But Investments Favor U.S. Stocks
Despite the success of the tax-free investment scheme in boosting stock investments, Prime Minister Kishida's vision of wealth distribution and recycling household savings through companies remains unfulfilled.
- Japan's Nippon Individual Savings Account (NISA) program, a tax-free stock investment scheme, is set for a major overhaul in January as part of Prime Minister Fumio Kishida's 'new capitalism' initiative.
- The changes will increase the annual investment limit to 3.6 million yen, with a combined total balance of 18 million yen in NISA, which will be permanently tax-exempt.
- Despite the program's success in encouraging households to invest more in stocks, the majority of investments have historically gone into U.S. stocks, with the Nasdaq potentially being NISA's biggest winner.
- Kishida's aim to better distribute wealth and recycle household savings through companies remains unfulfilled as Japanese investors continue to favor foreign stocks over domestic ones.
- The number of NISA accounts has risen 46% since 2019, reaching over 19 million, and is expected to increase further with the upcoming changes.
Reuters 