U.S. Markets

Japan keeps top creditor nation status as external assets grow

TOKYO (Reuters) - Japan’s net external assets grew to their second-largest amount on record last year, rebounding from the prior year’s decline and making it the top creditor nation for the 28th straight year, the Ministry of Finance (MOF) said on Friday.

The net value of assets held by the government, businesses and individuals stood at 342 trillion yen ($3.10 trillion) at the end of 2018, up 3.7% from the year before, it said.

It compared with a record 351 trillion yen in 2014.

Japan’s net external assets were about 1.3 times those held by Germany, the world’s No.2 creditor nation with $2.35 trillion in net assets at the end of last year, followed by China.

Gross external assets rose slightly to a record 1,018 trillion yen, reflecting increases in Japanese direct investment overseas and growth in non-resident lending. External debt fell for the first time in nine years to 676 trillion yen due to falls in prices of Japanese stocks held by overseas investors.

In a positive sign for ongoing Japan-U.S. trade talks, the MOF data showed U.S.-bound direct investment hit a record 55.6 trillion yen at the end of 2018, up a tad from the previous year, making it the most popular destination and accounting for a third of overall Japanese direct investment overseas.

Friday’s MOF data comes as trade will likely be on the agenda during U.S. President Donald Trump’s visit to Japan beginning on Saturday.

Japan is under pressure to spur investment in the United States and create jobs there -- instead of boosting exports of cars and other goods -- to please Trump who advocates an “America First” policy to fix what he sees as unfair trade practices.

The MOF data also confirmed Japan’s overall current account surplus stood at 19.2 trillion yen in 2018, down 15% from the year before, backed mostly by income gains from overseas investments. This supports the view of Japanese officials who argue the country earns far more from its overseas investments than from its trade surplus.

Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong