Published February 21, 2006
Day-trading on the rise in Japan
By MARTIN FACKLER
YUKA Yamamoto dutifully quit work to assume her expected role as suburban homemaker when she married six years ago. But she quickly grew bored at home, and when she saw a television programme about online stock investing, she took US$2,000 in savings and gave it a try.
Downside signal: The rising popularity of online trading has coincided with a rally of almost three years in Japan's stock markets. The true test of day-trading will come when bears outnumber bulls
Today, Ms Yamamoto says, she has turned her initial investment into more than US$1 million as a day-trader, scanning her home computer for price movements in stocks, futures and foreign currencies that could lead to quick profits. And by writing books and holding seminars on trading strategies, she has also become a celebrity among homemakers who are investors. She says that she has met thousands of other married women who now play the stock market online, many without their husbands' full knowledge.
Having overcome the country's sluggishness in embracing cyberspace and deregulating discount brokerage firms, day-trading has taken off in Japan, the world's second-largest financial market, after the United States. The number of accounts at Japan's electronic brokerage firms reached 7.9 million last September, up from 296,941 in 1999, when the first such firm opened, according to the Japan Security Dealers Association. That is an impressive gain, even after considering that some traders hold more than one account.
While Japan's business establishment still frowns on this new, rough-and-tumble style of trading, it has exploded in popularity among many who previously played only minor roles in Japan's corporate-dominated economy, particularly young people and women.
'Day-trading is great because everyone is equal, even housewives,' says Ms Yamamoto, an energetic woman in her late 30s who declined to reveal her exact age or to document her trading profits. 'Success or failure depends entirely on how clever you are, and nothing else.'
Internet factor
Analysts say online investors are driving the soaring volume, and volatility, in Japan's resurgent stock markets. Internet trading, which did not exist before 1999, accounted for almost 29 per cent of equity trades in the six months that ended last September, according to the dealers association.
That more than accounts for all the increased trading during the Japanese market's rally. The leading Japanese stock index, the Nikkei 225, has risen about 40 per cent since August.
While all the short-term money sloshing around has helped Japanese stocks snap out of their decade-long slump, it is also creating new dangers, say analysts. Many recall how a similar fad in the United States in the late 1990s ended with many traders suffering substantial losses when the telecoms and dotcom bubble burst. As the bull market turned, over-leveraged speculators dumped their holdings, accelerating and exaggerating the decline in prices.
Something similar happened here last month, though on a much smaller scale, when prosecutors started an investigation of Livedoor, a Web portal company that had been a darling of Internet investors. The news set off an avalanche of sale orders, most placed online, according to securities companies, that shut down the computers at the Tokyo Stock Exchange, the world's second-largest bourse, after the New York Stock Exchange.
Since the Tokyo exchange reopened, Livedoor's share price has been in free fall, dropping more than 90 per cent in three weeks. The authorities in Tokyo filed charges last week against Livedoor's founder, Takafumi Horie, and three other former executives of his company, accusing them of spreading false information to inflate a subsidiary's stock price.
The exchange is racing to update its computers, but many analysts fear similar waves of panicked selling in the future. They also say that the rising popularity of online trading has coincided with a rally of almost three years in Japan's stock markets. It is easy to make money when prices are rising, they say. But day-trading may lose some of its luster in the next bear market. 'The real test will come when the market goes down,' says Yukihiro Yabuki, a managing director for marketing at Matsui Securities, one of Japan's largest online brokerage firms. 'Will they abandon day-trading as soon as things get tough? Do they really understand the risks?'
Trading goes on
So far, Livedoor's fall has failed to dampen enthusiasm for online trading. That popularity is seen in the appearance of televised day-trading competitions and in books with titles like How a University Student Like Me Made 300 Million Yen in Internet Trading.
Looking to win more clients, online brokerage firms have begun setting up trading sites that offer cell phone access, with price charts shrunk to fit palm-sized screens. Brokerage firms say that these sites have allowed trading even from taxis or restaurants.
The surge in day-trading has even created celebrities, including its own 'stock idol', a young woman named Maiko Asaba who poses in miniskirts for photographs in day-trading and stock investing magazines next to captions describing her fondness for ice cream and index futures.
'In Japan, every true subculture has celebrities,' says Ms Asaba, 28, a financial researcher and part-time day-trader who keeps a giant teddy bear next to her trading terminal in her cramped Tokyo apartment.
The dream of many day-traders, in Japan and in the United States, is to earn enough to make a living by trading full time. Analysts and traders estimate that only a few thousand people have reached that mark. The rise of online traders, as well as their go-it-alone ethic, has its critics. Many business leaders disdain the stock market as an unsavoury money game, for example, while many others dislike stock trading because of a traditional dislike for greed and the bitter memories from the collapse of Japan's equity bubble in the early 1990s. 'The sight of housewives trading stocks on personal computers undermines the education of children,' says Shunzo Morishita, chief executive of NTT West, a phone company. 'Making money without sweating for it undermines the work ethic.'
Against such attitudes, the biggest reason for the success of online trading here has been its anonymity, analysts say. Traditional brokerage firms scared away potential clients because orders had to placed by phone, or face to face. The Internet allows the Japanese - particularly women - to trade in the privacy of their own homes hidden from the possibly disapproving gaze of neighbours and friends. People 'can trade without being embarrassed', says Mr Yabuki of Matsui Securities.
Ms Yamamoto says that her husband, a university professor, has not objected to her trading, but she says she still has to walk a fine line between her desire to trade and her role as wife and mother. To spend more time with her two small daughters, she has started using trading programs to buy or sell shares automatically at certain prices and has hired a secretary to handle her speaking schedule and appointments with publishers. She says she has written or contributed to 17 books on Internet trading.
Despite the public attention she has received, Ms Yamamoto says, she has yet to reveal the full extent of her earnings to her husband, who insists on paying the family's bills from his modest university salary. 'He still thinks he's in charge,' she says. 'He just thinks I'm going to lose all my earnings, or blow it on clothes.'
Analysts say young Japanese, as opposed to many of their elders, are starting to view the stock market in a much more positive light: as a legitimate way to make money.
'This is a real turning point for Japan,' says Yoshiyuki Sayama, a researcher at the Kinzai Research Institute who has studied online trading. 'Japanese are learning how to take care of themselves financially. They are finally getting a real taste of capitalism.' - NYT
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Another Version
TOKYO: Yuka Yamamoto was a housewife who had given up her career after marriage when she took up online trading to earn pocket money.
Knowing nothing about stocks, she did what bargain-hunting housewives normally do: buy when the price looks low.
"I know by heart that a block of tofu normally costs 100 yen at a supermarket. So if the price is 80 yen I would buy, but if it's 150 yen I wouldn't," Yamamoto, a mother of two toddlers, told Reuters in a recent interview.
"I applied that to stock trading."
Six years later, her initial investment of 750,000 yen ($NZ8641.79) swelled to 30 million yen ($NZ350,000).
Leveraging her success, she has published more than a dozen books and DVDs, written for magazines and offered stock-market seminars.
The advent of internet trading has allowed more women to enter the previously male-dominated world of stock trading, and recent five-year highs in Japanese share prices have lured more investors.
No industry-wide figures are available, but E*Trade Securities Co Ltd, Japan's largest online brokerage, said about 30 per cent of new account signups are now women, up from 24 per cent two years ago.
Overall, women represent a quarter of total account holders, up from 23 per cent.
"Women are entering the stock market at a faster speed than before," said E*Trade spokesman Takeru Suzuki.
"Thanks to the internet, housewives can trade between washing and cleaning."
Second-ranked online brokerage Matsui Securities Co Ltd said female investors account for more than 20 per cent of its account holders, up from 16 per cent a year ago.
The ranks of women who trade through investment clubs grew 25 per cent in the past year to more than 500, according to Aprosis, a three-year-old body that promotes such clubs.
Aprosis' first survey of 68 clubs showed that 52 per cent of their club members are women, and it expects the number of female clubs to grow, as more women are studying the market and preparing to dive in.
"Women are trend-sensitive, and once someone takes action, many others follow suit," said Toshiyuki Ogino, an adviser at Aprosis, which is partly backed by the Japan Securities Dealers Association.
With the Nikkei share average hitting against its highest levels since November 2000, retail investors are flocking to the market.
By value, they represent about 40 per cent of all trades on the Tokyo, Osaka and Nagoya stock exchanges, up from about 10 per cent five years ago.
Goldman Sachs said in a report in November that it expects retail investors to shift more of their savings into stocks and investment trusts.
Goldman said such investments now account for 11 per cent of Japan's overall household financial assets, but that figure could rise to 22 per cent, about the same as in Germany, resulting in 153 trillion yen ($NZ1.87 trillion) worth of funds flowing into the market.
Other numbers suggest women are better savers than men. Dai-Ichi Life Research Institute said the average woman in her 40s holds about twice her annual income in savings, while an average man in his 40s has only 1.3 times his income in the bank.
As a result, single women including widows own 140 trillion yen worth of financial assets, 10 per cent of Japan's overall financial assets, Dai-Ichi Life estimates.
Some corporations are looking to capitalise on this power of the purse.
Amuse Inc, shopping centre operator Parco Co Ltd and consumer credit firm Credit Saison Co Ltd held their first female-only investor meetings this year and planned to do more.
Yamamoto said women tend to realise the need for money especially after having children, noting that half of the mothers in her daughter's kindergarten class are engaged in stock trading.
"The mothers now talked about companies' earnings and what stocks they bought," she said.
"Before, they just chatted and gossiped about someone."
