May 13, 2017 4:00 am JST

Market Scramble: Getting out while the going's good

Retail investors offload a Nintendo swinging toward 'Pokemon Go' peak

YU SHIMADA, Nikkei staff writer

The popular Switch console is likely to spur Nintendo's profit even higher.

TOKYO -- After a week of the Nikkei Stock Average flirting with 20,000, cautious individual investors are moving to lock in profits early by selling shares before they peak out.

Nintendo gained as much as 215 yen, or 0.72%, early Friday only to later lose steam, ending down 0.22% at 29,480 yen. Investors instead flocked to Oriental Land, which rose a seventh straight session to close at a new year-to-date high of 6,882 yen.

In earnings, Nintendo is the better performer of the two. It has enjoyed strong sales of the Switch hybrid game console launched this March, and many expect double-digit profit growth in the year ending March 2018.

Tokyo Disneyland operator Oriental Land is expected to post lower sales and profit this fiscal year. But its share price is recovering about a month behind Nintendo's as market players take an interest in the relatively underpriced stock.

"For Nintendo, investors are conscious about the 30,000 yen mark," said Tomoichiro Kubota of Matsui Securities. Retail investors tend to take profits once they get a sense of how high prices could go, rather than hang on until the shares actually get there. They are also willing to sell on margin when prices start to drop.

Nintendo surged to 32,700 yen last July on the success of "Pokemon Go." Oriental Land, on the other hand, does not face any looming thresholds. Although both stocks remain extremely popular in Japan, this subtle difference has affected retail investment strategies.

Individuals tend to make contrarian moves when facing key milestones. But many shied away from large-scale trading until last month, in light of the growing North Korean threat and other risks. They have nowhere to go, and a record of more than 12 trillion yen ($105 billion) is now parked in money reserve funds.

Falling stock prices were supposed to encourage more investors to buy. But when Japanese shares recovered significantly after the French presidential election, retail investors began selling instead.

The trend can be seen throughout the market. There are now a record 77.44 million shares of the Next Funds Nikkei 225 Double Inverse Index Exchange-Traded Fund, which generates returns when the Nikkei average declines.

Most companies have already announced results, and few market-swaying factors are expected to emerge next week. Unless retail trading draws foreign investors back to Tokyo, the Nikkei average may keep hovering below 20,000.

Nintendo Co., Ltd.

Japan

Market(Ticker): TKS(7974)
Sector:
Industry:
Consumer Durables
Recreational Products
Market cap(USD): 52,060.3M
Shares: 141.66M

Oriental Land Co., Ltd.

Japan

Market(Ticker): TKS(4661)
Sector:
Industry:
Consumer Services
Movies/Entertainment
Market cap(USD): 27,288.5M
Shares: 363.69M

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