Japan built a buyback machine and gave it to households. It’s called NISA, but the function is simpler than the acronym: a perpetual, tax-free wrapper that turns pay checks into flow. You don’t argue with flows. You front run them.
The new NISA (2024) did three unfriendly things to equity bears: it made the tax break permanent (no holding period clock), it raised the annual allowance to ¥3.6 million split between a “tsumitate” (¥1.2m) and a “growth” bucket (¥2.4m), and it added a lifetime cap of ¥18 million, of which up to ¥12m can sit in the riskier growth bucket. And yes, sold room can be reused later; the allowance resurrects. It’s the rare government program that behaves like a momentum strategy.
As of June 2025 there were 26.96 million NISA accounts, with cumulative purchases of ¥63 trillion. That’s not sentiment; that’s wiring instructions. The government’s 2027 targets were 34 million accounts and ¥56 trillion of purchases. The purchase target was passed in year two; the accounts target looks like a formality. Policy scoreboard: NISA 1, Skepticism 0.
Look back one year to see the slope: 2024 alone added ¥17.4 trillion of NISA buying (about ¥12.4 trillion via the growth bucket and ¥5.0 trillion via tsumitate). That is what a regime change in tax treatment looks like on a tape.
Now zoom out. Japanese households hold ¥2,239 trillion of financial assets; ¥1,126 trillion (50.3%) is still in cash and deposits. If even 1% of total assets bleeds toward equities and funds over time, that’s ~¥22.4 trillion of incremental demand; 1% of cash alone is ~¥11.3 trillion. You don’t need a DCF to see how that changes the clearing price of domestic risk assets; you need a calculator and patience.
Put differently: Japan has engineered a domestic, tax incentivised, monthly bid that buys the dips, forgets to sell, and compounds quietly. Meanwhile, issuers are under pressure to raise capital efficiency and unwind lazy balance sheets; the supply side is not exactly fighting back with secondary offerings. That’s an asymmetry you can own.
The obvious portfolio translation is boring and effective: anything that intermediates household flow (platform brokers, index providers, low fee fund complexes) and the kinds of large cap domestics that show up in growth bucket shopping lists. The less obvious trade is “flow sensitive microstructure”: stocks with float that actually moves when the tsumitate drip hits, plus big cross holding unwind beneficiaries. The best time to buy a structural bid is before everyone agrees it’s structural. The second best time is today. [1]
Sources for figures: FSA program parameters and limits; FSA NISA utilisation graphs (June 2025); JSDA New NISA white paper (2024 flows); BoJ Flow of Funds (household asset mix).
Not investment advice.
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