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Japan foundations see limited economic boost from Abenomics: survey

Japan's Prime Minister Shinzo Abe attends a memorial service ceremony marking the 68th anniversary of Japan's defeat in World War Two, at Bu
Japan's Prime Minister Shinzo Abe attends a memorial service ceremony marking the 68th anniversary of Japan's defeat in World War Two, at Bu

TOKYO (Reuters) - Almost half of Japanese charitable foundations, some of which have sizable assets, think Prime Minister Shinzo Abe will need to increase his economic stimulus measures to get the country onto a sustainable recovery path, according to a survey.

A survey by Mizuho Securities of more than 400 such non-profit foundations, a relatively little known group of investors, also showed they were eager to boost foreign stocks while planning to cut holdings in structured notes and Japanese investment trusts called toshins.

Still, most of foundations put safety over higher returns, and virtually none showed interest in alternative investments such as hedge funds and private equity.

In the Mizuho survey, 55 percent of 408 polled foundations did not expect Japan's inflation rate to reach 2 percent in two years, a policy goal the Bank of Japan (BOJ) set when it unveiled a massive two-year stimulus plan this year. Another 28 percent said they expect the inflation objective to be met.

Japan's core consumer price rose 0.7 percent in July, ostensibly in line with the BOJ's policy objectives, data showed last week, though the rise was driven mostly by energy price hikes, not necessarily by stronger domestic demand.

In the survey, 49 percent of the foundations expected Japan to step up stimulus as Abe's policies will not boost the economy as much as targeted, while 21 percent said the Japanese economy was on a sustainable recovery path.

A small number of investors saw scenarios such as stagflation, a return to deflation and an all-out selling in Japanese assets due to mounting concerns on the country's dire fiscal conditions. Japan's debt is more than twice the size of its economy.

It isn't clear how much of total investment in Japan is done by the foundations, as their activity is combined with households in the BOJ's flow of funds survey.

While the exact size of investments by these foundations is hard to gauge, BOJ estimates put the total assets held by Japan's non-profit sector, which include schools and religious groups, at 48.9 trillion yen ($489 billion) as of March.

About one-half of the respondents in the Mizuho survey have assets of more than 1 billion yen, and seven said they had more than 50 billion yen.

(Reporting by Hideyuki Sano; Editing by Richard Borsuk)

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