TOKYO, Nov 30 Reuters Japan39;s big tax break to incentivise its citizens to funnel some of the trillions of yen held in cash into stock market investments and boost the economy is succeeding, but only partially.

Under Prime Minister Fumio Kishida, the Nippon Individual Savings Account programme which exempts retail investors from paying capital gains taxes on holdings of stocks is expanding significantly in scope from January.

And yet, investments under the nineyearold scheme have historically gone primarily into U.S. stocks, and that Japanese affinity for U.S. stocks could mean Nasdaq is NISA39;s biggest winner.

Conversations with brokers and retail investors suggest Japan is having some success with NISA households are channeling more savings into stocks and taking more risk.

But Kishida was also hoping wealth will be better distributed and household savings will be recycled through companies. That remains wishful thinking.

Overseas stocks dominate the popular investment product rankings at online Japanese brokerages, such as the Monex Group and SBI Securities.

Ideally, Japanese investors would invest in the domestic stock market, inspiring foreign investors to also buy Japanese stocks and in turn broadening Japan39;s capital markets in what would be a very happy scenario for the Kishida administration, said Takashi Hiroki, chief strategist at Monex.

The goal of the Kishida administration is to increase household assets. At the end of the day, it39;s okay if…