As expectations grow that the Takaichi administration's expansionary fiscal policy will continue, views are gaining ground that low interest rates will be maintained and funds will flow overseas. A children's NISA is scheduled to start in the next fiscal year, and it has been suggested that individual investors may begin allocating funds to overseas equities for the purpose of building assets.
For the time being, the government is reportedly planning to prioritise aggressive fiscal spending without specifying its funding sources, while the Bank of Japan is expected to be called on to continue a cautious monetary policy. As a result, views are gaining ground that interest rates will remain low, making it difficult for expectations of domestic growth to rise and causing funds to flow overseas.
From next year, a children's NISA will be launched, and the number of individual investors allocating funds to equities in the United States and emerging markets, where growth is expected, for their children's education and asset building is expected to increase.
Foreign direct investment by companies is also expected to increase more than before, and companies directing funds to countries with strong growth prospects are becoming increasingly prominent in order to achieve gross margins exceeding the rise in borrowing costs and the returns sought by investors.
Acquisitions of overseas companies by companies focused on domestic demand are also increasing. Sumitomo Forestry's acquisition of U.S. company Tri Pointe Homes and Dai-ichi Life Group's acquisition of Fidelity Life are cited as representative examples. It has also been suggested that approximately half of the proceeds from direct investment are reinvested locally rather than being returned to the domestic parent companies.
This trend highlights the current situation in which the administration, seeking to lift the Japanese economy through aggressive fiscal spending, has not been able to raise growth expectations among individuals and companies sufficiently.