AI boom fuels leveraged trading by Japanese retail investors, with margin trading turnover doubling in six months to a record high

Odaily News: Individual investors in the Japanese stock market are increasingly using leverage to bet on the AI rally. According to a report by Nikkei on the 13th, as of July, the total margin trading amount by individual investors in the Japanese stock market reached 123 trillion yen (approximately 1.09 trillion yuan), doubling from the beginning of the year and hitting the highest level since comparable data began in 2016.

Data shows that in June, the margin trading volume of Japanese individual investors hit a record high, and remained elevated in July. Meanwhile, margin trading’s share of total individual investor trading volume rose to 83%, also setting a new record.

AI-related stocks have been a key driver behind the surge in margin trading. As AI stock prices fluctuate significantly, investors are borrowing funds or shares for short-term trades to capture pricing opportunities. Among them, AI memory stock Kioxia Holdings saw its margin buying balance reach 13.23 million shares as of August 7, making it one of the hot targets.

Tomohiro Kubota, an analyst at Matsui Securities, noted that popular AI stocks such as Kioxia have recently exhibited high volatility, with active trading centered around short-term profit opportunities.

Benefiting from the recent rise in the Japanese stock market, leveraged investors have performed relatively well overall. The floating profit rate of margin trading investors briefly turned positive in June—a rare occurrence—and although it slipped back to a loss of 8.4% at the end of July, it remains better than the 10-year average loss of -10.2%.

However, analysts warn that the heating up of AI-themed trading has also amplified market volatility risks. Should popular AI stocks experience a sharp pullback, highly leveraged retail investors could face margin call pressure.