Online brokerages post 540 billion yen in first-half sales

10-year floating-rate bond yields 1.95%, outpacing deposit rates

Buyers under 40 now account for 20% of purchases

Rising rates draw younger investors to safe-haven assets

Pedestrians walk past an electronic stock board displaying the Nikkei 225 index at a securities firm in Tokyo on Sunday (local time). [AP]
Pedestrians walk past an electronic stock board displaying the Nikkei 225 index at a securities firm in Tokyo on Sunday (local time). [AP]

Rising interest rates in Japan are drawing more individual investors to retail government bonds. Sales through online brokerages have surged to more than four times last year's level, and younger investors are increasingly treating government bonds as a viable new investment option. Personal funds long parked in near-zero-rate accounts appear to be shifting toward bonds that offer both returns and security.

Online brokerages including SBI Securities, Rakuten Securities and Mitsubishi UFJ eSmart Securities sold 540 billion yen ($3.46 billion) worth of retail government bonds in the first half of this year, according to the Nikkei. That is 4.4 times the volume recorded in the same period last year.

Issuance of retail government bonds across Japan also rose sharply. The Finance Ministry said total retail bond issuance in the first half of this year reached 4.52 trillion yen, up 1.6 times from the same period a year earlier.

Rising interest rates are driving the surge in bond investment. The yield on Japan's 10-year floating-rate retail bond hovered around 0.1 percent annually in early 2023, but the most recently offered product carries a rate of 1.95 percent — surpassing the 1.25 percent annual rate on 10-year fixed-term deposits at major Japanese banks.

Younger investors are also joining in. According to SBI Securities, buyers in their 30s and under now account for about 20 percent of retail bond purchases, up from a base that just a few years ago was dominated by investors in their 40s to 60s.

Analysts say the combination of improved yields and the bonds' reputation as a safe asset with reliable principal repayment is drawing younger investors.


sjy@heraldcorp.com