America’s Billionaires Love Japanese Stocks. Why Don’t the Japanese?

TOKYO—Japan’s government is on a mission to make buying stocks hot again.

Many of America’s biggest investors are bullish on Japan. Warren Buffett shared that he increased his investments in Japanese companies during an April visit to the country. Ken Griffin is preparing to reopen an office in Tokyo for his hedge fund, Citadel, and investment banks Goldman Sachs and Morgan Stanley have issued optimistic outlooks for Japan’s stock market.

Japan’s problem is this: There are few signs its estimated 125 million residents share in the excitement.

Burned by dismal returns since the bursting of Japan’s asset bubble in the late 1980s and early 1990s, generations of families here have stashed most of their money in low-yielding savings accounts rather than trying to increase their wealth through the stock market.

Japanese households put an average of just 11% of their savings into stocks and 54% in cash and bank deposits, according to Bank of Japan data released last month. That trails well behind the U.S., where households have about 39% of their money tied up in the market and only 13% in cash and bank deposits, according to Federal Reserve data.

Haruyo Arai, a 62-year-old office worker, began investing in the stock market just last month.

“I was brought up by parents who would say, ‘Don’t dabble in stocks,’ ” she said.

Japanese Prime Minister Fumio Kishida has pledged to double households’ asset incomes, in part by encouraging people to invest in risky assets like stocks. The government is raising caps for Japan’s tax-exempt investment system for small investors, the Nippon Individual Savings Account, with changes set to take effect in January. The Tokyo Stock Exchange has been urging companies to boost their valuations and increase shareholder returns.

Arai cited the upcoming expansion to NISA, along with a desire to save more money for the future, as some of the reasons she decided to begin taking investing more seriously. She has been taking weekend classes at Tokyo-based Financial Academy to learn more about stocks and waking up early every morning to watch a TV news program focused on the economy.

Some believe investors like Arai will prove to be the exception, not the rule. Stocks here haven’t hit a record in decades. There isn’t much buzz among ordinary people about investing in Japanese markets.

“I’ve got the impression that Japanese people don’t really think positively about the desire to make money,” said Takashi Kawaguchi, a 48-year-old office worker who, like Arai, has been learning about investing at Financial Academy.

While the 2023 rally has helped lift Japanese stock indexes to 33-year highs, long-term returns pale in comparison to what an investor would have gotten by investing in U.S. stocks. The Nikkei closed at 32,402 on Friday, still 17% below its record hit in 1989. The S&P 500 has grown more than twelvefold over that time. That has made many investors here turn to foreign markets instead of focusing their bets within Japan.

“The Nikkei might hit 40,000, god knows when,” said Heihachiro “Hutch” Okamoto, foreign equity consultant at retail brokerage Monex. “But most of our investors prefer U.S. stocks.”

To Okamoto’s point, the most popular names traded on Monex daily aren’t Japanese stock indexes like the Topix or Nikkei, brand-name companies like Sony or even the “sogo shosha”—the trading houses that Buffett has invested in. Instead, they are all American names: companies like Nvidia, Tesla, Apple and Amazon.com, as well as funds tracking the S&P 500 and the Nasdaq-100.

And that is just among those interested in investing in the first place. While in past years, everyday investors in Japan made a name for themselves with their forays into the foreign exchange market, the overall trading culture here has been one of hesitation.

“Most people here think investing is very risky,” said Hidekazu Ishida, a special adviser at FinCity.Tokyo, which works with the government and the financial industry to try to boost investment in Tokyo. Being into finance comes off as “kakkowarui,” he added, referencing a word for uncool.

Even some heads of companies are lukewarm about the idea of encouraging more individual investors to buy Japanese stocks.

“I’m neutral about that,” said Takeshi Niinami, chief executive officer of whisky and beverage giant Suntory, when asked if he thought it would be a good idea for more Japanese people to invest in the market. Stock investing is risky, he said. And many Japanese people remain wary of participating in the market, because of the severity of prior downturns.

“I think perhaps increasing interest rates is better for people,” he said.

—Chieko Tsuneoka and Alastair Gale contributed to this article

Elon Musk’s SpaceX is set to make its stock-market debut Friday in the largest IPO ever—and perhaps the most closely watched. The company sold an outsized portion of the offering to individuals. Its performance on Friday will be a crucial gauge of investor appetite for mega-offerings from OpenAI and Anthropic expected later this year.

The rocket maker, which derives most of its revenue from its satellite internet unit and has a nascent artificial-intelligence business, will trade under the ticker “SPCX.” It sold 555.6 million shares at $135 each, raising about $75 billion in a deal that valued the company at roughly $1.77 trillion.

When will shares open for trading?

SpaceX executives are set to ring the Nasdaq’s opening bell in New York, but shares in buzzy initial public offerings don’t tend to start trading until later in the day.

Bankers leading an IPO typically want to match buyers and sellers for about 10% of the shares sold before opening trading to lessen volatility. For SpaceX, that would be about 55 million shares, or roughly $7.5 billion worth.

Because pre-IPO investors are restricted from selling shares for a while, it can take time to find willing sellers among those who bought shares in a high-demand IPO.

Shares of Alibaba , the largest U.S. IPO until SpaceX, opened for trading a little before noon in its 2014 offering. Last year, one of the highest-profile offerings was that of software maker Figma , whose shares started trading just before 2 p.m.

It is possible that SpaceX’s bankers will decide to start trading without matching the typical portion of orders to ensure the shares have several hours of trading on their first day, people familiar with the matter say.

How volatile will the stock be?

Bankers and traders expect SpaceX’s share price could be volatile in initial trading, thanks in part to the large portion of its shares expected to be held by individual investors. Some who anticipate individuals will rush into the shares worry they could just as easily get spooked and rush out.

Any sharp movement in stock price could trigger so-called circuit breakers that could pause trading. For most newly listed companies, a 10% swing in either direction prompts a five-minute pause. Companies that had their shares halted include Figma and Cerebras Systems , the chip company whose shares soared in its May debut.

These forced timeouts applied to single stocks came after the so-called flash crash in 2010, when the Dow Jones Industrial Average fell 700 points in eight minutes before recouping much of the loss.

What is all the talk about the ‘green-shoe’ option?

If the stock starts trading erratically, bankers have a secret weapon to attempt to calm things down.

Underwriters typically sell more shares to investors than an IPO’s total offer size, colloquially called the green shoe. In SpaceX’s case, they sold about 15% more shares than the stated offering size.

Because this means they technically allocated more than the offering amount, the so-called stabilisation agent, in this case, Morgan Stanley , needs to buy back the excess number of shares to deliver them. If the stock starts to fall, the bank will buy the shares in the open market, which helps buoy the stock price. If the stock isn’t faltering, the stabilisation agent can buy the additional shares they need to deliver to investors directly from the company.

The term “green shoe” comes from the first company to employ a version of this method years ago, a shoemaker that was a predecessor to Stride Rite. When Meta Platforms , then known as Facebook, went public in 2012, its shares started dropping and its bankers stepped in to buy more shares.

How will Elon Musk’s take-it-or-leave-it pricing fare?

Like all things Musk, SpaceX’s IPO bucked the norms. Instead of approaching prospective investors with a possible price range for shares ahead of the IPO and incorporating their feedback, the company set an exact share price from the beginning: $135.

The idea was to limit drama for what is already the biggest IPO of all time. It did, however, remove what many see as an important step along the way: price discovery. The success of this approach will partly be judged by how SpaceX’s shares trade Friday. If the stock surges, critics will say SpaceX left money on the table by not pricing shares higher. If the stock falls or trades flat, there will likely be critiques that SpaceX and its advisers overestimated demand.

Will the machinery hold up—and what will be the wider market impact?

The sheer size of SpaceX’s IPO will test the trading infrastructure at Nasdaq and could have ripple effects in the broader market.

Nasdaq has practiced with mock openings to make sure its trading platform is prepared. When Facebook went public, some investors who tried to change or cancel orders ahead of trading didn’t get confirmations because of a technology malfunction. The confusion contributed to Facebook shares dropping on the first day of trading. They didn’t return back above their IPO price for more than a year.

Meanwhile, some market watchers expect added activity Friday in stocks that individual investors might sell to buy SpaceX shares, such as those of technology companies and Musk’s electric-car maker Tesla . Such sales already appeared to be under way earlier in the week, when individual investors dumped single-stock holdings on a net basis for two days in a row, according to Vanda Research. (To be sure, those sales came on days that were poor showings for tech stocks broadly.)

It will take several days for SpaceX shares to show up in any major index funds , so the offering’s wider impact on the market could play out over the next several weeks or longer.