Japan’s HNWIs shun Digital Assets and ESG
Lombard Odier published their “Asia-Pacific’s high-net-worth insights 2022”, and it is a treasure trough of data, from a survey of 450 HNWI across the region. For the purpose of this article, we share the findings regarding digital and sustainable assets.
Although Japan has been at the forefront of establishing a robust regulatory framework for virtual assets, the uptake among HNWIs lags the region. 83% of Japan’s HNWIs have not invested in digital assets, a last place ranking jointly with Australia.
An obvious inhibitor would be the tax treatment of virtual assets in Japan, which are classified as “other assets” and subject to the personal income tax rate, rather than the regulator capital gains rate, although HNWIs in particular should be able to devise structures that can mitigate that treatment.
However, despite the relatively low allocation to virtual assets, Japanese HNWIs rank highest when it comes to decreasing the weight of their portfolio allocation in the future, at about a third. This follows the recent severe correction in high risk/high volatility assets, including cryptocurrencies (“crypto winter”).
Similar to digital assets, Japan (25%) shows the highest percentage of HNWIs not holding sustainable investments at all, the worst alongside the Philippines (27%) and Indonesia (25%).
This is despite the constant drumbeat of ESG marketing in the country, which originated from the early decision of the Government Pension Investment Fund (GPIF) to include ESG criteria in the evaluation of its managers. Like many other attempts to get the Japanese saver invested in market products, and create a thriving asset management industry, so far the abundance of ESG-themed products and marketing have not resulted in an above-average uptake of this investment class among HNWIs compared to the region.
For more detail, and possible explanations, we recommend you download the full Lombard Odier report.
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