The Japanese reputation for prudence is not that justified OTHER than Mrs Watanabe, the mythical Osaka housewife who places big bets on foreign currencies, Japanese investors have a reputation as a cautious lot. Nearly half said that preservation of principal was their top priority in a 2007 poll by clsa, a broker. Half of all Japan's household assets of ¥1,500 trillion (around $20 trillion) are parked in the safety of cash and bank deposits. Only 6% of assets are in equities, compared with 32% in America. There are good reasons to be prudent. The stockmarket remains three-quarters off its 1989 peak; property prices have fallen for almost 20 consecutive years. The best investment over that time has been Japanese government bonds, admits At-sushi Saito, the boss of the Tokyo Stock Exchange. A decade of deflation has meant that the value of cash in the bank has soared in real terms. Yet the image of timorous investors resisting risk is not quite right. It takes about ten years for the public to become comfortable with investing, says Tim McCarthy, the boss of Nikko Asset Management. America's deregulation in the 1970s ushered in the 1980s surge in mutual funds. Britain's financial reforms 25 years ago set the stage for a Iate-i99os investment boom. Japan's "big bang", which included measures to liberalise trading commissions, encourage independent financial advisers and foster defmed-contribution pension plans, happened only in 1998.
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