TOKYO -- Small- and medium-capitalization shares are trading briskly as investors reluctant to go after exporters snap up stocks linked to domestic demand.
Aggregate turnover on the Mothers and Jasdaq markets has topped 200 billion yen ($1.78 billion) since the start of June. It came to 264.2 billion yen Tuesday, up 12% from the previous day and beating the January-May daily average of about 160 billion yen by more than 60%.
Price movements are also firm. The Topix Small index has risen 11% since the end of last year. The TSE Mothers Index and the Nikkei Jasdaq average soared 27% and 19% over the same period, handily outpacing the Nikkei average's rise of 6%. Both the Topix Small index and the Jasdaq average hit 26-year highs Tuesday.
Investors feel safer buying small- and mid-cap stocks, whose domestic focus shields them from events abroad. The unpredictability in the Chinese and U.S. economies, as well as in exchange rates, has made large-caps difficult to invest in.
Growth in large-cap stocks has also given retail investors extra funds to redirect toward small- and mid-caps, creating a virtuous cycle.
Game developer Enish has been the highest-growth stock on the first section of the Tokyo Stock Exchange since the end of last year. It went limit-up Tuesday after announcing a tie-up with an idol group on a new game.
On the Jasdaq market, recent cyberattacks have led security software provider Asgent to nearly quintuple since the end of last year. And on Mothers, IT consultancy Change has been bought on expectations of investment in workplace reforms.
The main buyers are likely speculators taking notice of rapid price movements. "Some stocks seem like they are overheating," said Takehiro Okada, head of the trading department at Rheos Capital Works. "They are difficult to actively invest in."
Investors could take flight from smaller-cap stocks should the yen continue to weaken and the market grow more bullish on large-caps.