May 17, 2014 4:54 am JST

Tokyo stocks continue descent as retail investors head to exit

TOKYO -- With scant likelihood of a broad stock rally, individual investors have begun to unload their loss-laden holdings, extending the market's losing streak.

     On Friday, the Nikkei Stock Average dipped more than 280 points at one point, almost touching the psychologically important 14,000 mark and nearing the year-to-date low of 13,910 set on April 14.

     Of all the issues on the Tokyo Stock Exchange's first section, 197 fell to year-to-date lows. The tally is second only to April 11, when 372 sank to the bottom. About 80% of the 197 were small and midsize companies with market capitalizations of less than 100 billion yen ($974 million), which were often targeted by retail investors.

     Internet media operator Livesense, which announced Thursday a profit decrease for the first three months of this year, went limit-down on Friday. Game arcade operator Round One and horse-racing-track operator Tokyotokeiba, as well as other stocks that depend mainly on domestic demand, also saw steep drops.

     Startup stocks are lackluster as well. The Nikkei Jasdaq Stock Average hit a year-to-date low, and the Tokyo Stock Exchange Mothers market came close to doing so. Both indexes have been undergoing corrections for four months, after reaching highs in January. The Mothers index has fallen over 30%.

     Due to a prolonged market correction, individual investors with latent losses on their shareholdings are not engaging in cyclical trading. The percentage of losses incurred by stocks bought on margin had reached 14.3% on Friday, according to Matsui Securities. To compensate for the losses, "investors are selling domestic-market stocks that are generating profit" to lock in capital gains, said Tomoichiro Kubota, senior market analyst at Matsui.

     Among such examples are high-end restaurant operator Hiramatsu and entertainment ticket provider Pia, which fell 2.5% and 2.3%, respectively, on Friday. These stocks have stayed relatively strong since April, making them ripe for profit-taking.

     The lack of choices for selective buying is also discouraging retail investors. Unlike last year, when smartphone-related stocks and newly listed shares rose, it is now hard to find themes or specific shares in which individual investors can park their money, says an analyst at Sumitomo Mitsui Asset Management.