TOKYO -- The recent rise and fall of Money Partners Group's stock illustrates how the hazy outlook for Japanese shares has made the brief but wild swings of issues driven by incentives stand out even more, as day trading surges and buy-and-hold investors keep their distance.
The foreign exchange brokerage caught the eye of day traders after a recent cabinet decision designating cryptocurrencies as a legal form of payment. Shares of Money Partners, which is considering a partnership with the U.S.-based operator of bitcoin exchange Kraken, more than tripled over two weeks in late February and early March after languishing around 300 yen ($2.66).
Money Partners had announced in July the possibility of a tie-up. The Japanese company is in talks with Kraken and pursuing other avenues, said Norihiko Nakanishi, a director. Though actual services are some way off, conditions are improving, he said, citing the development of a legal foundation for bitcoin.
Despite these comments, two investors hold substantial short positions in Money Partners. Japanese hedge fund Capital Management and an anonymous retail investor have disclosed short interest equivalent to 1.16% and 1.52% of outstanding shares, respectively.
And after the stock closed limit-up at 1,132 yen Tuesday, Rakuten Securities -- the company's second-largest shareholder with a roughly 10% stake -- said it had sold 230,000 of its 3.28 million shares.
Rakuten Securities had supported Money Partners since before its stock market debut. But the brokerage has distanced itself from the company since developing its own in-house foreign exchange system. Rakuten Securities had been considering selling shares for some time, and then Money Partners' price surged, a Rakuten source noted. All of the unloaded shares were sold on the open market amid heavy trading, the source said.
Money Partners whipsawed Wednesday amid mixed sentiment on the stock. It climbed in the morning but plunged in the afternoon, going limit-down at one point. The stock racked up the most completed trades on the Tokyo Stock Exchange at 54,554 -- three trades every second on average.
Stocks linked to incentives such as popular themes are usually targets for individual investors seeking quick profits. But, as seen with Money Partners, these price fluctuations are playing out faster. Because day traders have suffered less from the market's plunge this year, the duration of retail investors' trades has contracted, Tomoichiro Kubota of Matsui Securities said.