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June 2006 -- Over the last decade, a number of changes in Japan's financial sector have led a stream of foreign companies to take their businesses to Japan or expand upon existing Japan operations:

• More investors are willing to put their funds in riskier investment vehicles
• The upward movement of the economy and deregulation in corporate law has boosted M&A activity
• Lifts on prohibitions that previously prevented sales of certain financial products have given foreign companies access to previously closed markets, such as sale of foreign securities at banks and variable annuities by foreign companies
• Planned privatization of the postal system has drawn in some of the world's top investment and asset managers who await the opportunity to service Japanese consumers who hold savings in the world's largest savings institution, the Japan Post

Such changes in Japan's financial sector are creating new revenue streams for foreign companies seeking to service Japan's growing demand for new financial products and services.

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Foreign Securities
More Japanese investors are looking overseas for better returns than what they typically earn from low-rate domestic savings vehicles.  Access to overseas investments has been helped by deregulation that has allowed banks to sell foreign securities in their branches.  As a result, Japanese consumers purchased 21 percent more U.S. stocks, non-Treasury bonds and financial derivatives in 2005 than in 2004, totaling $62.8 billion.

Assets held by member firms of the Investment Trusts Association Japan (ITAJ) jumped by 37.6 percent to 58.5 trillion yen during Japan's fiscal year 2005 (April through March).  Foreign securities made up 37.1 percent of those assets, or 21.67 trillion yen.