Japan Investors Take Plunge in Stride : Investing: Despite the uncertain outlook for the Tokyo Stock Exchange, many individuals feel the market will rebound.
At Meiko Securities in the Shinbashi district of central Tokyo, a dozen men on Tuesday silently watched a bank of 12 television monitors flashing the latest stock prices. Others, smoking cigarettes, punched up stock quotes from two computers in the lounge.
But Mitsuru Tanaka, a 30-year-old rice dealer, belied the calm atmosphere. Seduced by the booming stock prices, Tanaka had decided last year to invest in the stock market for the first time because the rate of return was higher than the interest on savings accounts.
Tanaka initially invested 3 million yen--about $20,000--in 3,000 shares of textile, steel, electronics and trading firms. With earnings from those stocks, he invested another 2 million yen later in the year.
As the market plunged in the past week to its lowest levels since 1987, however, Tanaka figured he had lost 1 million yen--a fifth of his investment--and lamented that it was punishment for his greed. “Maybe this is heaven’s punishment because the money I got is not from hard labor or work,” said Tanaka, a stout gregarious man.
“I can’t even tell my wife. I didn’t tell my father. He believes in old values and doesn’t like this gambling and making a profit out of it. He feels you should work hard instead.”
These are nervous, uncertain times for Tanaka and more than 21 million other individual investors in Japanese stocks. Fears of higher interest rates and a weak yen have sent the Nikkei index of 225 stocks tumbling 11% in the past week, before recovering slightly on Tuesday.
It is not yet clear how much individual Japanese investors have suffered in real or paper losses. But despite the market’s uncertain outlook, many investors such as Junko Shibue, a 33-year-old Tokyo homemaker, said they would hold on to their stocks because they were optimistic that the market will rebound. Many also felt they acted too hastily in selling stocks after the market crash of October, 1987.
“I can wait even four or five years because it does not affect our family budget,” explained Shibue, who began investing in stock three years ago. “I only spent our family’s spare money for the stocks.”
N. Yuasa, a legal assistant at a Tokyo chemical company, shrugged off the 1 million yen in stock losses that he suffered over the past week. “The stock prices were overvalued; maybe they went down as expected. We had this educational effect from (1987). Then, we dumped our stocks. Now, we all feel we shouldn’t move too much. The only people who are dumping stocks are institutional investors. Those who have invested their own money have taken a wait-and-see attitude.
“This is a good exercise for my brain,” he smiled. “If I go for a pachinko game, it will cost the same amount of money and I won’t learn anything.”
Individual investors such as Tanaka, Shibue and Yuasa are important customers to Japan’s brokerage houses, which have lured them into investing by touting hefty stock returns of 30% to 40% a year, compared to 7% on bank accounts.
Although major institutions and companies hold more than 75% of the stocks listed on the Tokyo Stock Exchange, retail sales are still a key segment for brokerage houses in Japan. “Retail business to Japanese business is very important,” explained Yoshiro Katsuya, senior vice president in charge of the institutional sales division at Nikko Securities in New York. “Commission revenue per share from institutional buyers is less than from retail buyers. . . . The volume of actual transactions from institutions is much larger than from individuals. However, profitability from the individual investor is much larger.”
As a result, the Japanese brokerage business, dominated by Nikko, Nomura, Yamaichi and Daiwa, works hard to court individual investors and advertises heavily to them. They dispatch female sales representatives to go door-to-door to sell stocks to housewives, who control family expenditures and investments.
Widespread publicity about stock trading helped persuade Shibue to invest her current 5 million yen in stocks. “Maybe I was influenced by the Japanese media, which had repeatedly told us all the good things about stock investment,” she said. “I concluded myself that at least it is better than bank savings.” Her stock profits have financed family vacations to Europe and the United States and helped to purchase the family car.
Yuriko Kawai, 38, began actively buying stocks two years ago after she took an introductory class on the stock market where she met some homemakers who invested 50 million to 100 million yen. She transferred nearly all of her family savings to stocks.
Those handsome stock earnings helped her and her husband buy a three-bedroom apartment 15 miles from downtown Tokyo. “Honestly speaking, it was a shock for me,” said Kawai of the market decline. “However, after the fall (the market) goes up, and after the rise it falls. That’s the stock market.”
To tap another market of potential customers, brokerages have been dispatching sales representatives to visit offices to sell stocks. Masako Ikuta, a 57-year-old former office worker, put a small amount of money in an electric company’s stock several years ago and three years ago, at the behest of her husband, bought several thousand more shares in Hitachi, Fujitsu and Kirin Beer.
But she said she doesn’t particularly enjoy playing the stock market and had not even checked how much she had lost over the last week. Ikuta said she only invested because it had become “some kind of fashion” among her women workers.
Teresa Watanabe reported from Tokyo and Nancy Yoshihara from Los Angeles. Takeshi Yabe, Tokyo bureau research assistant, contributed to this story.
