Thursday, May 23, 2013

UPDATED--Nikkei Down 1,143: Where the Hell is Mrs. Watanabe?

Update: "Will Japan’s Retail Investors Stay or Flee?"

Original post:
You may have noticed a dearth of posts on the Japanese markets the last couple weeks, the last one being May 15th's "The Latest Chapter in Japan's Amazing Market Drama" and before that "Hayman Capital's Kyle Bass: Predicting the Next Financial Collapse" (and no this isn't the collapse moment).

It's not because of any black-box wizardry or deep insight, rather it was because the story was getting boring. Talk about jaded.

The linked post, "The Nikkei: a market abducted by retail" nails the participation of the round-eyes but the Japanese investors were notable by their absence. Here's part I of the story, from FT Alphaville:
The Nikkei: a market abducted by retail
Blame Bernanke, China or the BoJ but this Nikkei rout has apparently been led by the little guys. From the FT:
Over the past few weeks, individual investors’ share of trading had risen steadily, to a record 35 per cent last week. Brokers say their share was almost certainly higher over the past few days, judging by huge volumes in popular stocks such as Fast Retailing, owner of Uniqlo, and Mitsubishi Motors [...]
I'm reminded of the Friday the 13th crashette, Oct. 13, 1989. Coming two years after the U.S. market's worst day ever, the big concern was that the 6.91% decline was only the warm up to something worse, just as the then record DJIA point drop, 108 on Friday Oct. 16, 1987, was the warm-up to Black Monday.

The crashette was not the start of a collapse, the Big Bull Market continued for another decade and life went on.

So here we are, another Friday and while I don't think the Nikkei will see a 22% decline on Monday, big bull markets end with a whimper rather than a bang, today was a reminder that there is no free lunch, at least not until Mrs. Watanabe joins the party.

Also at Alphaville:
Japan’s mini crash: Blame China, not just Ben