Japanese Households Shift From Deposits to Stocks, Funds at Record 679 Trillion Yen

* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.

1. Money Floods Into Stocks and Funds in Japan, Overtaking Insurance and Pensions for First Time

- Key summary: The balance of stocks and investment trusts held by Japanese households has surpassed insurance and pensions for the first time. According to flow of funds statistics released by the Bank of Japan, holdings of stocks and investment trusts stood at 590 trillion yen at the end of March, overtaking insurance and pensions at 579 trillion yen. It is the first time the two have switched places since March 2005, the earliest period for which figures are available. In preliminary figures for the end of June, household financial assets totaled 2,519 trillion yen, up 11% from a year earlier, while stocks and investment trusts jumped 44% to 678.9608 trillion yen. Cash and deposits, by contrast, rose just 0.5% to 1,131 trillion yen. Analysts said the Nikkei 225's move above 70,000 in late June, the increase in yen-converted value of foreign-currency assets on the back of a weaker yen, and the bedding-in of the new NISA drove inflows into risk assets. Household holdings of government bonds and fiscal investment and loan bonds also reached 21.9 trillion yen, the highest since June 2013.

2. Japan's Policy Rate Hits 31-Year High; Ueda Says Further Hikes Will Be Paced

- Key summary: The Bank of Japan raised its policy rate target to around 1.25% from around 1.0%, a 25 basis point increase (1 bp = 0.01 percentage point), lifting it to the highest level in 31 years, or since 1995. Since ending negative interest rates in March 2024, the central bank had generally raised rates about once every six months, but this move came just three months after its June meeting, analyzed as the shortest interval between increases since 1990. Cited as factors were higher international oil prices following renewed hostilities between the United States and Iran, expanding global AI demand, and import price pressure from a weaker yen. The European Central Bank and the U.S. Federal Reserve also raised rates in the same month, creating the first instance of three central banks tightening simultaneously, according to Bloomberg. Governor Kazuo Ueda left open the possibility of a bigger step along with plans for further increases to achieve the 2% inflation target, but cautioned against abrupt tightening. Two policy board members voted against the decision, and with the yen sliding to the 157 range against the dollar, the market was judged not to have read his remarks as sufficiently hawkish.

3. Hormuz Shipping Halt Lifts Security Value of SK's Australian Gas Field

- Key summary: As military conflict between the United States and Iran shows signs of dragging on, warning lights have come on over supply and inventories in the liquefied natural gas market. Damage to a major Middle Eastern pipeline, a halt to navigation on shipping routes and an extension of QatarEnergy's force majeure declaration have coincided, while the European Union's regional gas storage fill rate remained at 65%, a record low. A winter scramble for volumes with Asia is seen as unavoidable. Reflecting that, the value of gas field development project deals worldwide reached $32 billion in the first half of this year, the largest in more than a decade. SK Innovation (096770) E&S has secured 1.3 million tons of LNG a year from the Barossa gas field in Australia, where it has participated since 2012 with a 37.5% stake, giving it a sourcing structure that bypasses the Strait of Hormuz. Korea Gas Corporation brings in 700,000 tons a year through a 5% stake in LNG Canada, and POSCO International (047050) acquired a gas field in the U.S. Marcellus basin for $550 million (about 736 billion won). Hanwha Aerospace (012450) also set up Hanwha Horizon USA to handle procurement and trading, part of a continuing diversification of supply sources. As a result, Korea's import mix from January to July this year was reshaped to Australia at 28.4%, Malaysia at 17.8%, the United States at 14.3% and Canada at 8.4%, with Qatar shrinking to 6.5%.

4. Two Days After Clarity Act Fails, U.S. SEC Eases Rules on Tokenized Stocks

- Key summary: The U.S. Securities and Exchange Commission has sharply eased regulations on tokenized stocks, which allow listed shares to be bought and sold in digital asset form. The SEC decided to exempt token stock venues (TSVs) meeting certain conditions for five years from rules that had applied to them on the same terms as ordinary securities exchanges. The measure applies only to tokens carrying the same shareholder rights as ordinary shares, including dividends, voting rights and ownership, and excludes tokens that merely track share price movements as well as newly issued shares. The industry expects Coinbase and Robinhood, which already distribute tokenized stocks overseas, to qualify for the exemption. Because venues must disclose their plans 30 days before starting operations, the first are expected to appear from next month at the earliest. The U.S. Commodity Futures Trading Commission on the same day issued a measure exempting software companies handling digital asset wallets from registering as financial firms. Amid concerns about gaps between existing stock market prices and token prices and conflicts of interest arising from overlapping exchange roles, related shares responded immediately, with Securitize closing 15% higher and Coinbase and Robinhood both gaining more than 5%.