Japan should significantly expand JGB sales to retail investors, lawmaker says
Japan should significantly expand JGB sales to retail investors, lawmaker says By Makiko Yamazaki and Takaya Yamaguchi
TOKYO, Oct 6 (Reuters) - Japan should expand sales of government bonds to households on a much larger scale to create a more stable domestic investor base, prominent ruling party lawmaker Kenji Nakanishi told Reuters on Tuesday.
Nakanishi, a former executive at J.P. Morgan Securities, has spearheaded efforts to boost household ownership of Japanese government bonds (JGBs), believing stronger retail demand could help stabilise the market as the Bank of Japan retreats from years of massive bond purchases.
"I've been saying for some time that we need to move retail bond sales onto a completely different scale," Nakanishi, an executive member of the Liberal Democratic Party's finance commission, said in an interview.
"If sales rise from current 5 trillion yen ($31.63 billion) or 6 trillion yen to 10 trillion yen or 20 trillion yen, that starts to matter."
Retail JGB sales totalled 6.16 trillion yen in April-October, up 90% year-on-year, the Ministry of Finance said on Tuesday, already surpassing its 5.9 trillion yen sales target for the entire fiscal year ending in March, as rising yields fuelled household demand.
The planned sales to households, however, represent just 3% of the government's total planned JGB issuance for this fiscal year, highlighting Nakanishi's view that there is substantial scope to increase household ownership of JGBs given more than 2,000 trillion yen in Japan's household financial assets.
To boost retail demand, Nakanishi suggested introducing super-long fixed-rate and inflation-linked retail bonds, while also advocating inheritance tax incentives for long-term holders.
His campaign is gaining traction among lawmakers as higher interest rates have made government bonds more attractive to households, he said, with the benchmark 10-year yield having risen above 3% for the first time since 1996.
Policymakers should seize the opportunity while momentum is building, Nakanishi said. "It's the perfect timing to push harder."
($1 = 158.0800 yen)
(Reporting by Makiko Yamazaki and Takaya Yamaguchi; Editing by Jacqueline Wong)