This October securities companies began allowing their customers to purchase stock in extremely small quantities, running campaigns extolling the possibility of "playing the market with pocket money." Transactions can now be conducted with a tenth of the capital formerly required, making it easier for individual investors to dabble in stocks. Getting the masses back into the market is considered the key to its revitalization and to the recovery of stock prices, and the securities industry is hoping that the new scheme will do the trick.
Investing for under 100,000 yen
One of the principal causes of the prolonged slump of stock
prices has been the flight of individual investors, who
accounted for 49% of the total value of stock transactions in
1985, before the market began to superheat amidst the furious
speculation that characterized the "bubble economy." By 1992,
after Japan's speculative bubbles had burst, this share had
fallen to 25%, and it has since continued to nose downward,
recently flirting with the 20% mark. Alarmed by this trend,
securities companies hit upon the "mini-investment" scheme
initiated this October to provide individual investors with an
attractive means of playing the market.
Until now, almost all stocks were transacted in 1,000-share
units, meaning that even a purchase of stock costing less than
1,000 yen per share set a buyer back several hundred thousand
yen. Under the new provisions, stocks can be bought and sold in
units of 100 shares, making the market more accessible to
noninstitutional investors, who can dabble for less than 100,000
yen.
Initial response favorable
The public's initial response to "mini-investment" has been
favorable. One leading securities firm received over 1,000
purchase orders on October 2, when it kicked off the scheme, and
a stock market seminar it organized simultaneously was
overwhelmed with applicants.
Within the securities industry, concerns have been voiced
by small companies about the profitability of such low-value
transactions, but the majority view is that it is necessary to
come up with ploys to lure individual investors back into the
stock market, even if this entails losses. The coming months
will therefore likely see a rush to jump on the mini-investment
bandwagon.
The lowering of barriers to participation in the stock
market has led to a redoubling of calls for securities firms to
make available advice about stocks and portfolio management
tailored to the special needs of individual investors.
(The above article, edited by Japan Echo Inc., is based on domestic Japanese news sources. It is offered for reference purposes and does not necessarily represent the policy or views of the Japanese Government.)