Under the pressure of inflation, there is a wave of investment in temples across Japan. (AP file photo)
[Financial Channel/Comprehensive Report] Driven by historic inflation, the prosperity of the asset management industry is quietly spreading to temples across Japan, and an investment boom is emerging among religious groups. Unable to afford the maintenance costs of a century-old temple, Koukyo Yoneta, the fifth-generation abbot of a small town in Hokkaido, chose a path that his predecessors would never have thought of. Instead of waiting for believers to make up for the financial gap, it was better to invest the donations he had already received.
Within two years, Yoneda’s U.S. Treasury bonds, Japanese real estate investment trust funds, and stock investments such as BYD and Hyundai Motor achieved annual returns of more than 10%, helping him pay part of the maintenance costs of approximately 25 million yen (approximately NT$5.18 million). The additional funding even allowed him to expand the renovation beyond his original plans.
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Yoneda used to work at Daiwa Securities Group and was an abbot who was proficient in finance. Like other monastery staff, he turned to the financial market in order to make ends meet. The cost of maintaining these ornate wooden buildings has skyrocketed in recent years, and Japan's Buddhist population has dropped by about 14% in the past 20 years as older believers die and younger people in big cities reduce religious activities.
Yoneda, 46, inherited the Kongo Temple from his father in 2018. Yoneda, who once worked in finance, said that he was very grateful for the good returns on these investments. He also said that as the funeral business shrinks, more and more temples will find that they cannot rely solely on donations from believers to meet their financial needs. They must build up reserves and invest them.
The decrease in the number of believers is significantly affecting the financial revenue of temples. According to a 2021 survey of 7,000 temples by the Jodo Shinshu Honganji sect, one of Japan's largest Buddhist groups, about half of the temples have an annual income of less than 4 million yen (approximately NT$829,000). This situation is particularly serious in rural areas, because abbots often have to manage multiple monasteries while also holding other jobs such as teachers or civil servants.
Traditionally, funerals and cemetery maintenance were the main source of income for monasteries, as families paid high fees for more solemn ceremonies. However, since the outbreak, people have begun to spend less on funerals, a trend that continues as inflation increases daily household expenses. Some temples popular with tourists charge admission, but most lack other sources of income.
For some monks, raising prices or investing to cover rising costs poses a moral dilemma, as Buddhist principles require them to shun greed.
Take Nara Daianji Temple as an example. Most of the temple's assets are still held in cash, and about 10% of its assets are currently invested in foreign currency-denominated insurance products to obtain higher interest returns. Deputy abbot Yusho Kono said their investment style is "purely defensive" to avoid any conflict with the teachings.
Kono admits that the position itself is contradictory. In principle, monks should not engage in profit-making activities, but if action is not taken now, the temple may cease to exist. The production costs of the traditional royal guards sold at Daanji Temple have increased significantly in the past 2 years.
The change in the attitude of monks highlights the pressure that continued inflation brings to traditional institutions that are accustomed to price stability. Tsuyoshi Kawata, a senior researcher at the corporate investment strategy department of SMBC Nikko Securities, said that temples have limited ability to charge believers more for services, which further highlights the importance of asset management. It is not easy to increase prices when the overall market is shrinking, and it may no longer be feasible to leave cash idle. They will find ways to increase revenue, even if it is only a slight increase.
The rise in bond yields after the end of the negative interest rate era has also provided risk-averse religious figures with a comfortable investment environment. The Soto sect, which has about 15,000 temples across Japan, has been taking advantage of the higher yields. Among the eight accounts it manages, the total amount is approximately 13 billion yen (approximately NT$2.69 billion), of which approximately 10% is invested in Japanese government bonds planned to be held until maturity, and the other 2% is invested in bonds issued by the Japan International Cooperation Agency (JICA) to fund the development of emerging economies.
Religious groups, schools and other non-profit organizations are gradually becoming major buyers of fixed income products. According to data from the Bank of Japan, as of March, non-profit organizations including schools and religious institutions held holdings worth 5 trillion yen (approximately NT$1.0 3 trillion) of corporate bonds, approximately double the expected holdings in 2023. During the same period, Japanese government bond holdings also increased from 2.5 trillion yen (approximately NT$518.25 billion) to 2.9 trillion yen (approximately NT$601.17 billion).
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