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Stocks

Japan's small-cap stocks hit 25-year high amid win streak

Retail investors flocking to domestic earners over riskier blue chips

TOKYO -- The Nikkei Jasdaq Stock Average extended its winning streak to a 19th session Wednesday as retail investors kept flocking to small-cap shares here, choosing relatively safe domestic earners over blue chips susceptible to external pressure.

The Jasdaq average closed at 3,050.54, up 0.2% on the day, to reach the highest in 25 years and eight months. Other benchmarks including the Tokyo Stock Exchange Second Section Stock Price Index traded at historic highs.

Share prices for domestic-focused companies have climbed faster since the beginning of the year, when then-President-elect Donald Trump criticized Japan's trade surplus with the U.S. Around that time, the yen reversed its depreciation following Trump's election, and "investment shifted from export stocks toward domestic shares, of which Jasdaq has many," said Hideyuki Ishiguro, a senior strategist at Daiwa Securities.

Such Jasdaq issues are enjoying strong earnings, with fiscal 2016 net profit for 686 listed enterprises likely to climb 40.6% on the year, according to The Nikkei's calculations. Profit is seen growing just 10.5% for companies outside the Jasdaq or TSE Mothers Index that close their books in March.

Many such domestic-focused Jasdaq shares "seem to have potential to grow to match the changing industry structure," said a chief fund manager at Mitsubishi UFJ Kokusai Asset Management.

The top performer since the end of last year has been Nomura Micro Science, as the share price has tripled for the maker of pure water systems whose customers include semiconductor-related businesses. Cybersecurity company Asgent's stock price has slightly more than doubled, and import-car seller Willplus Holdings has gained 160%.

Retail investment makes up roughly 70% of Jasdaq's trading value. With the stock market overall trading high, retail investors' paper losses on margin trading hit a roughly three-year low Feb. 24, indicating a clear recovery in investment wherewithal.

(Nikkei)

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