Japanese retail investors double down on leveraged trading amid AI stock surge

According to Nikkei News, individual investors in Japan are increasingly using leverage to bet on the AI rally. By July, the amount of margin trading by individual investors in Japan’s stock market reached JPY 123 trillion (approximately RMB 1.09 trillion), doubling since the beginning of the year and hitting the highest level since statistics began in 2016. Data shows that margin trading volume by individual investors set a record in June and remained high in July. Meanwhile, the proportion of margin trading relative to total individual investor trading volume rose to 83%, also a record high. AI-related stocks have been the primary driver of this surge in margin trading. For instance, the margin buying balance for Kioxia Holdings, a leading AI storage stock, reached 13.23 million shares as of August 7, making it one of the most popular targets. Benefiting from the recent rise in Japan’s stock market, leveraged investors have generally performed reasonably well; the unrealized return for margin traders turned positive in June—a rare occurrence—and although it dipped back to a loss of 8.4% by the end of July, it still outperformed the average 10-year loss level of -10.2%.