Nomura Holdings, Japan's top brokerage, plans to offer simple financial products to lure risk-averse Japanese retail investors who are still licking their wounds from the financial crisis, a company executive said.
Individuals prefer to invest in corporate bonds, equities and equity funds with unsophisticated strategies while the outlook for global financial markets remains murky, Takazou Nishihara, executive director at Nomura Securities, told Reuters in an interview on January 13.
Japanese individuals, who hold about $16 trillion in personal assets mostly in bank accounts, are still leery about taking on risk after suffering huge losses amid last year's turmoil, but they will continue to seek instruments yielding higher returns than their bank deposits, Nishihara said.
"It will take a while before retail investor appetite returns to the level seen in early 2008 or 2007 as investors now have less room to take risks," said Nishihara, who is in charge of developing financial products for retail investors.
"If this continues then we will have to offer simple financial products or instruments with low risk."
Japanese investors had been buying equities heavily, with net inflows into Japan stocks hitting a record 1.06 trillion yen ($11.86 billion) in October.
But since the Nikkei share average plunged to a 26-year low at the end of that month, investors have been playing it safe, hunting for bargains in domestic equities and corporate bonds, he said.
They are now taking a wait-and-see stance, he said, due to high volatility in the stock market and a slew of bearish earnings projections by companies such as Toyota Motor Corp and Sony Corp. Sony will likely suffer an annual operating loss of about $1.1 billion, its first such loss in 14 years, due to sluggish sales and a stronger yen, a person with knowledge of the matter said. Nomura will recommend more corporate bonds to retail investors as their wider spreads are drawing demand, Nishihara said.