March 12, 2018 / 6:53 AM / 2 years ago

Long-only retail Japanese investors scoop up Japan shares

(This version of the March 12 story was refiled to correct dateline to March 12 from March 5, adds data source)

FILE PHOTO: Employees of the Tokyo Stock Exchange (TSE) work at the bourse in Tokyo, Japan, February 6, 2018. REUTERS/Toru Hanai

By Ayai Tomisawa

TOKYO (Reuters) - Japanese retail investors bought about 1 trillion yen ($9.37 billion) of domestic stocks over the past six weeks as they saw bargain hunting opportunities after the recent sharp slide, helping to put a rough floor under the market.

Buying by Japanese retail investors using cash, and not margin trading, reached a net 980 billion yen between the fourth week of January and the last week of February, data from Japan Exchange Group has showed.

In February, they were net buyers of Japanese stocks on a monthly basis for the first time since March 2017, the data also showed.

(For a graphic of Japanese retail investors click

“It’s long-term money that’s going to serve as a shock absorber when the market slides, just like how pension funds’ buying supports the market’s weakness,” said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“Unlike institutional investors, retail investors don’t have to worry about quarterly performances, so even if there is a short-term downside risk, they tend to buy cheap quality stocks in order to hold for two to three years.”

After hitting a 26-year high of 24,129.34 points in mid-January, the Nikkei share average .N225 slumped to below 21,000 points, a level not seen since October, hammered by Wall Street's rout stemming from rising inflation worries and fears of a global trade war.

Retail investors’ buying cushioned the blow from 2.1 trillion yen of net selling by foreign investors, whose activity has a massive impact on the Japanese market due to its size, for the past eight weeks.

Japanese shares also have been helped in the last few sessions on hopes of easing tensions over North Korea.

But market watchers say Japanese stocks, in particular steelmakers, are likely to remain under pressure after the United States imposed tariffs.

Trump has offered the possibility of excluding other allies, on top of Canada and Mexico, from the planned tariffs on steel and aluminum imports. Tokyo has sought such an exemption.

“For now, the market seems relieved with Trump’s decision to exempt NAFTA partners. It’s not like there will be a trade war immediately, but there is still uncertainty,” said Takashi Ito, equity market strategist at Nomura Securities.

($1 = 106.7100 yen)

Reporting by Ayai Tomisawa; Editing by Kim Coghill

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