Japan loses saving grace

Mrs Tanaka's £190bn bubble-era savings are heading back to the Post Office
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The Independent Online

Japanese savers will next month have access to £190bn of previously untouchable funds, a milestone which had been expected to provide a surge of adrenalin to Nippon's economy. But experts predict that the savings will go straight back where they came from.

Japanese savers will next month have access to £190bn of previously untouchable funds, a milestone which had been expected to provide a surge of adrenalin to Nippon's economy. But experts predict that the savings will go straight back where they came from.

The estimated ¥28,000bn worth of Japanese postal deposits can now be redeemed by a public who avidly squirrelled away its cash throughout the bubble era of the 1980s. Fund managers and stockbrokers have been licking their lips with anticipation, but it is now predicted the event will be more whimper than bang.

The November round of savings maturity represents the peak of a process that has been building up throughout the year. When the first batch appeared around March, the Japanese had plenty of ideas as to what to do with their new-found wealth. With the stock market soaring and Japan's technology companies buoyed by the extraordinary performance of their counterparts on Wall Street, equities looked to be a sure-fire route to further riches. A sudden boom in amateur investment gripped the nation just long enough for fund managers to realise there was serious money to be made.

Thousands of new funds were set up over the course of March and April, designed to woo the savings of the housewives who controlled the family purse-strings. Funds were advertised in huge campaigns, and branded to appeal both to the Japanese love of famous names, and the internet vogue.

Following that success and in readiness for November, the funds have been advertising again, but this time the scene is very different. The life has been sucked out of the Japanese stock market, and many of the funds, particularly internet-based ones, have lost a fortune. So, say analysts at Nomura, the great likelihood is that when Mrs Tanaka - the classic Japanese housewife - comes to collect the matured savings next month, she will put them straight back into the Post Office.

Colin Asher, from Nomura's debt research team, says: "Many investment managers are going to be very disappointed. Everyone has been looking at ways of attracting these savings, but if people just roll them back, they'll get nothing."

The Post Office itself is partly responsible. It has also been running a campaign warning the Japanese public about the risks of stock investments. Even though it offers re-investors a derisory rate of interest, public fear of the market is running high enough for the PO still to seem attractive.

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