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Stocks

Market Scramble: Retail investors buy startups to avoid BOJ impact

TOKYO -- Underscoring their flexibility, retail investors appear to be passing on blue chips highly exposed to the Bank of Japan's actions and taking another look at emerging shares.

The BOJ's decision to stand pat on its ultraloose monetary policy Thursday sparked a widespread selloff in the Japanese equities market by disappointed investors, but startups proved surprisingly resilient. The Nikkei Stock Average fell 3.61%, while the Nikkei Jasdaq Stock Average edged down just 0.29%.

"I'm able to invest without worrying too much about monetary policies taken at home, in the U.S. or Europe," a 50-something Tokyoite said. Starting this spring, he is investing mainly in the startup market. His investments were mostly in major Tokyo Stock Exchange first-section shares until the BOJ-driven market swings forced him to bail out.

Midtier real estate company Shinoken Group is one Jasdaq security in his portfolio. It lost 2% on Thursday but fared better than big-name rivals including Mitsubishi Estate, which all shed 5-7%.

Jasdaq-listed Ascot went limit-up Thursday after turning in an outstanding earnings report the day before. The condominium developer posted a group net profit of 110 million yen ($1.01 million) for the six months ended March, five times the year-earlier figure.

"Emerging equities sustain minimal noise from monetary policy, so their prices tend to be more reflective of earnings and other qualities distinct to each," said Masayuki Otani of Securities Japan. This sets them apart from TSE first-section stocks, which are prone to wild fluctuations based solely on easing speculation.

Ubic bucked the trend Thursday on the heels of its announcement that U.S. patent authorities have found that its artificial-intelligence-assisted data analysis technology meets the requirements of patentability. Yamada Consulting Group also had an up day on its profit growth outlook for this fiscal year.

Biomedical stocks like Sosei Group and SanBio were sold, but investors apparently redirected the funds into a new round of selective purchasing, said Shunichi Otsuka of Ichiyoshi Securities.

Owing to these tendencies, the Jasdaq average has overtaken the Nikkei average in performance over the past month. The TSE's Mothers market has also gained 30% since the end of last year.

The Abenomics-driven stock rally since November 2012 has been supported by a series of surprise monetary easing measures by the BOJ, which led to a weaker yen and pushed up share prices. But market players say the central bank increasingly appears to have run out of ammunition, and many point out side effects from the negative-rate policy.

Despite Thursday's market turmoil, the Nikkei volatility index, which shows the level of anxiety among investors, actually moved 6% lower. This usually happens when time values for options shrink because of the Golden Week holidays, according to a major brokerage, but it also indicates that the market has moved past the BOJ's monetary policy meeting -- the perceived source of all the disturbance. In any case, market attitudes are definitely undergoing a transformation.

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