Japan Records Surge in Net Foreign Assets

Japan held $180.3 billion in net foreign assets at the end of 1986, surpassing the highest U.S. level of $140.7 billion in 1981, the Ministry of Finance reported Tuesday.

As of the year’s end, Japan had $727.3 billion in claims against other countries, an increase of $289.6 billion in one year, the ministry said.

Claims against Japan by other countries amounted to $547 billion, a gain of $239 billion.

The report also confirmed the continuing surge of overseas borrowing by private Japanese firms, which doubled to reach $322.2 billion, as well as a 77% increase in private Japanese investment in foreign stocks and bonds. Overseas investments in securities reached $257.9 billion last year, the ministry said.

Although the ministry did not say how much the Japanese held in U.S. Treasury bonds, institutional investors such as insurance companies and trust banks now play a major role in determining prices and interest yields of the instruments that finance the U.S. government budget deficit.

Japanese institutional investors were estimated to have bought more than 50% of the 30-year bonds that the Treasury Department sold at its quarterly auction in February and more than 40% of those sold in May.

Modest Proportion

Direct overseas investment, although rising 32%, reached an accumulated total of only $58 billion last year, less than a fifth of the portfolio investment in stocks and bonds. Most of it, the ministry said, came in the form of acquisitions of financial institutions and established manufacturing companies, many of them in the United States.

Despite a widely predicted shift toward manufacturing in overseas plants as a result of the steep appreciation of the yen, Japan’s direct foreign investment fell from 10% of its accumulated overseas investments in 1985 to 8% in 1986.

It was the second year in a row that Japan ranked as the world’s No. 1 creditor nation. As recently as 1983 Japan held only $37.2 billion in net foreign assets, At the end of 1985, it held $129.8 billion more in claims against the rest of the world than other countries held against it.