In Japan, Day-Trading Like It’s 1999

Ko Sasaki for The New York Times

Maiko Asaba has become a celebrity for her day-trading. She is featured in Japanese investing magazines.

 

By MARTIN FACKLER

Published: February 19, 2006

TOKYO

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 program about online stock investing, she took $2,000 in savings and gave it a try.

Today, Ms. Yamamoto says she has turned her initial investment into more than $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 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," said Mrs. Yamamoto, an energetic woman in her late 30′s 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."

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 percent of all 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 percent 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 1990′s ended with many traders suffering substantial losses when the telecom and dot-com bubble burst. As the bull market turned, overleveraged 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 percent 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 an almost three-year rally 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," said 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?"