The Japanese Stock Market

sh856531

Hi All,

Can anyone tell me if the fact that the Japanese stock market has been essentially idling for god knows how long has had a serious effect on people in Japan's ability to save for their retirement?

I think most people in the UK who are saving for a pension probably have a fair amount of their money invested in the FTSE and are relying on equity growth in one form or another to give them a better-than-cash return over the long term.

We've probably all heard about how Nikkei lost something ridiculous like 60% of its value and then never recovered. That got me wondering about whether the same thing will happen in the US and UK.

Does anyone know how the Japanese save for their retirement given that the Nikkei can't be very good for growth? Do they invest in other nations markets? Or do they just invest in cash/bonds etc?

I'm just trying to understand how they can get a reasonable pension if they can't rely on their own country's companies to provide long term growth.

Many thanks all

S

gozomark

its actually about 80% down - Nikkei peaked at 40,000 odd 18 years ago - is now under 8,000

what do they invest in ? Jp govt bonds, property. Most have decent company pensions, but like many Western countries face a big problem of aging population, in fact they face it even worse due to falling birth rate and almost zero immigration meaning population is falling

tradetime

Their pension system is in a mess afaik but then who's isn't. There has been much scandal surrounding it The japanese are a nation of savers so I suspect on the whole they as individuals are in better shape than we are.
As to the link between their stockmarket, from it's peak pre-depression I think it still remains 80% below, but that won't necessarily mean there isn't any growth or returns to be made from the range it is trading in now, bear in mind the Nasdaq has only retraced about 50% of its fall from the 2000 high, and that was before the recent collapse, we are now well on our way back to the 2002 lows.

Japanese Pension Crisis

jon3001

sh856531 wrote: »

Can anyone tell me if the fact that the Japanese stock market has been essentially idling for god knows how long has had a serious effect on people in Japan's ability to save for their retirement?

I don't see why. There're plenty of other places to invest aside from the Japanese stock market.

sh856531 wrote: »

Does anyone know how the Japanese save for their retirement given that the Nikkei can't be very good for growth? Do they invest in other nations markets? Or do they just invest in cash/bonds etc?

I'm just trying to understand how they can get a reasonable pension if they can't rely on their own country's companies to provide long term growth.

They shouldn't try to rely on their own country's companies. They should have a diversified portoflio that includes international stocks as well as other asset classes.

sh856531

I don't see why. There're plenty of other places to invest aside from the Japanese stock market.

No doubt - but most of the people I know personally are saving into pensions that put the majority into the FTSE. I was wondering what the Japanese do

dunstonh

but most of the people I know personally are saving into pensions that put the majority into the FTSE.

That is not consistent with most people. Balanced managed funds are by far the most common. Legacy plans have with profits as the most common option. FTSE trackers became more common with stakeholder pensions from lower quality providers.

tradetime

sh856531 wrote: »

No doubt - but most of the people I know personally are saving into pensions that put the majority into the FTSE. I was wondering what the Japanese do

One thing perhaps you need to consider also, is stock prices are relative, 48,000 ish may have been the all time high, but that was then this is now. The index has just adjusted to a new range. compare a chart of the Nikkei 225 and the S&P500, you can see there are still gains and losses of 20, 30 50% the absolute levels are irrelevant.