Just as Japan was ending the nation’s state of emergency and purring over the success of the “Japan model”, analysts started to draw a detailed picture of how coronavirus has transformed sales of certain items and, by implication, behaviour.
The roster of winners, according to the market research firm Intage, reflects the huge demand rises arising from self-preservation (masks, antiseptic gargle, hand sanitisers), crowded homes (air freshener, therapy equipment) and for lockdown sustenance (spaghetti, flour and, in an unexpected seventh place, whipped cream).
The goods that have seen acute year-on-year sales contractions — led by lipstick, anti-wrinkle spray, hangover medicine, energy drinks and vitamin B1 pills — underline just how much of Japan’s consumer economy and habits revolve around the performances and punishments essential to office life.
What the figures miss, though, has been the extraordinary surge of interest that the past 12 weeks of telework, social distancing and office closures have focused on Japan’s stock market. Or at least, the frothiest, riskiest part of it.
Not all have publicly disclosed figures yet, but Japan’s five leading online brokerages have told the Financial Times that, between them, they clocked well over half a million new account openings in the months of March and April. At each firm, the flood of new customers was roughly twice the average pace for this time of year, and far greater than they had guessed when the numbers first began to shoot up in late February.
And, critically, these new converts to investment have not been idle. Relieved of many of the time-consuming demands (long meetings, unnecessary legwork, presenteeism) of the Japanese workplace, many have found they have hours to focus on stock picking.
Both the new arrivals and the existing customers, say senior executives of the online brokerages, have used the long weeks of telework to pile into the Tokyo Stock Exchange’s Mothers market — a 321-member group of biotech, software, fintech and other start-up companies, many with fragile and untested business models.
The effect of this mass arrival has been spectacular. Since its panic-induced low on March 19, the index that tracks the Mothers market has risen more than 72 per cent, and so far this year has outperformed Japan’s Nikkei 225, the Dow Jones Industrial Average and the Nasdaq. The traded volumes, in May, hit all-time records and the total market capitalisation of the Mothers market hit ¥6.5tn ($60bn), outshining the supposedly more prestigious TSE Second Section.
The retail investor enthusiasm for this particular market, for all its risk, is entwined with a thesis that circulates, in various forms, on the message boards and other social media that encircle the online stock trading game: the idea that Covid-19 is going to rewrite the fundamentals of business and that the pandemic is giving these small, innovative companies their big break.
For several reasons, there are those keen to interpret this as more significant than just a rise in a spivvy corner of the market, arguing that Covid-19, among the many behavioural changes it has brought about, has shifted previously unshiftable attitudes towards the equity market.
It is true that, in an unusually direct way, the Japanese market is performing its true function and channelling capital towards innovation just when economic slowdown threatened to interrupt that flow.
It also comes at a time when increasing numbers of Japanese companies are questioning the benefits of listed status, and grumbling that they are now outweighed by the burdens. An increasing number, say investment bankers and lawyers, are considering management buyouts and other forms of delisting. A resurgence of retail interest may cause some to reconsider.
But most striking of all is simply the decision by housebound Japanese to open trading accounts and start trading equities. It jars noticeably with their behaviour in the past. For 30 years since the collapse of the 1980s bubble, the Japanese have been net sellers of equities — relentless in that trend, no matter how effectively corporations cleaned up their acts and returned profits to shareholders.
The great question this leaves is whether, as offices reopen and Japan prepares to resume some cautious version of normal life, the momentum remains when investors go back to having less time.
As with the lists of goods that have won and lost through this crisis, it is easy to imagine that sales of eyeliner, shoe polish and frozen food will rapidly spring back to their previous levels. As they do, Japan will find out if the retail investors’ love affair with the Mothers market turns out to be brief holiday romance that ends as they step back on to the commuter trains.