Japanese stocks descend into bear market
Japanese stocks fall 5% with growth uncertain
Japan's central bank holds steady amid market volatility
The 1987 listing of Nippon Telegraph and Technology, the former state-run telecommunications company, drew such investor enthusiasm that its share price almost tripled in the first two months of trading, briefly making it the world's most valuable company by market capitalization.
Legends were born. Nui Onoue, a bar hostess in Osaka, earned a reputation for getting stock tips through divine guidance and became one of Japan's most active individual investors, controlling billions of yen in investments. Self-made billionaires like Kazuo Kengaku earned notoriety as "shite" (pronounced she-tay) or market movers who reaped hefty profits by driving stock prices up and down.
Then things starting going awry. By 1992, N.T.T. shares had lost four-fifths of their value, wiping out investors across Japan. Ms. Onoue was arrested in a $2.5 billion fraud scandal. Mr. Kengaku ran into trouble with his gangster associates, and his body was discovered encased in concrete in a forest in Kyoto.
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"The excesses of the bubble era gave stocks a dirty image," said Sumio Mochizuki, who runs Icas, a nonprofit company that is trying to popularize investment clubs in Japan. "Even if you're just getting together to trade shares, some people suspect you're up to no good, or that you're a criminal group," he said.
But as markets surged in 2013, "semiprofessional" day traders and Japan's wealthy seized the market upside and made some serious money, according to an analysis by Sumitomo Mitsui Trust Bank.
The fervor later spread as mom-and-pop investors who had watched nervously from the sidelines raced to the market. Suddenly, a proliferation of investment guidebooks hit bookstores: "Get rich with Abenomics," one advertised on its cover. "It's true: You can make money off stocks!" gushed another.
Soon, brokerage firms said they were inundated with applications for new accounts and attendance at investment seminars ballooned. In late May, Daiwa Securities, one of Japan's biggest investment banks, said it would increase its sales force by about 50 percent to handle the renewed interest in stocks.
"It's incredible. For a while, I didn't know anything but a bull market," said Mirei Tsugawa, 33, a novice investor who works at Narita Airport in Tokyo. "I didn't tell my parents what I was doing, though, because they'd be worried."
Perhaps for good reason. On May 23, the rally came to an abrupt halt. The market plunged 7 percent in a single trading session as foreign investors were unnerved by signs of a manufacturing slowdown in China and concerns over an early end to monetary stimulus in the United States.
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"Individual investors suddenly felt like they were sheep about to be gobbled up by hedge fund wolves," said Shinichi Watanabe, a professor in finance and economics at Tokyo International University and a former fund manager at the Sumitomo Trust and Banking.
A shift from saving to investment is a critical part of Mr. Abe's reforms. Next year, Japan is set to introduce tax-exempt individual accounts for stocks and mutual funds. Nomura Asset Management recently predicted that nearly 10 million people might use such accounts, generating a 26 trillion yen inflow into shares and investment trusts.
The drive has plenty of skeptics, however.
"Stock markets today are just a money game," said Mitsuru Sakurai, policy chief and lawmaker at the opposition Democratic Party. "Prime Minister Abe is creating a dangerous bubble, and we all know what happens to bubbles."