Small Investors Fret in Tokyo

THE one-quarter plunge in the value of the Tokyo stock market since January has ``everybody losing a feeling of confidence,'' says Koichi Iizuka, a small investor who works at a textile company. ``If this situation continues, it may lead to a stock market panic,'' Mr. Iizuka says. So far, he's lost $3,000 out of his $22,000 in stock investments. ``I feel helpless.''

Few economists and traders in Tokyo are that pessimistic, but they do say that small investors, as well as small businesses, could be the victims of a market adrift in uncertainty.

Many small investors bought stock with loans from brokers (a practice known as buying on margin). The outstanding margin purchases total about $6.3 billion. As the market has dropped, brokers have begun to call in their loans.

``The margin buyers have been forced to sell out to make their payments,'' says Yoshio Miyauchi, an equity specialist at Shearson Lehman. If enough investors run out of cash, many might start to sell their most valuable asset: Tokyo property.

And if Tokyo land prices go down, an economic buttress for Japan's economy begins to crumble.

Ichiro Suzuki, a small investor who lives on a pension, thinks the rising stock prices last year were a bubble.

``The prices of companies which own Tokyo land soared. The price did not reflect the actual business performance of such companies,'' he says.

The Nikkei average of 225 stocks closed Thursday at 28,249.06. It had dipped near the 27,000 level at one point in trading this week, more than 10,000 below the high at the end of 1989.

Complaints and grudges

``Sacrifice selling has started,'' says Hyosuke Osaki, an investment consultant working for Marusan Securities Co. ``The relationship between security companies and customers is becoming tense. We receive a lot of complaints and grudges.'' He says some customers have lost half their assets.

[The Associated Press adds that local news reports, confirmed by a broker who refused to be named, said more than 30 minor brokerages had been left with massive losses by speculators who were unable or unwilling to pay for their buy orders. The broker said his firm had been informed of the problem by stock exchange authorities.

[An official in the stock exchange's investigative arm said, ``The issue is basically a problem between securities firms and their customers. We are trying not to make a big fuss about it. ... If we did, it might make the market performance even worse.'']

Until Japan's big companies report their profits in May or June, the Tokyo Stock Exchange may remain unstable, says Kermit Schoenholtz, senior economist at Salomon Brothers Asia Ltd.

Nervous market

``There's an enormous amount of uncertainty and volatility. It tells us the market is rather nervous,'' he says.

The Japanese stock exchange has less linkage to the country's economic conditions than the New York exchange, points out Mr. Schoenholtz. The Tokyo market's rapid rise at the end of 1989 was mainly because of light volume of trading. ``The fact that it disappeared so quickly is not surprising,'' he says.

Investors may be waiting to see how Japan's big companies will weather this market downfall, as well as cope with higher interest rates, which were raised last month by Bank of Japan to curb inflationary pressure.

Economic fundamentals, while not as good as last year, are still quite attractive, say Tokyo economists. Household savings had a record year in 1989, and capital spending has had a three-year boom.

Most Japanese companies still have plenty of cash for investment, although a weak stock market and higher interest rates could begin to affect investment by the end of the year.

Smaller companies may be pinched by the new conditions, although many have close ties to Japan's large exporters.

As for individual investors, the Long-Term Economic Bank of Japan points out that they hold only 15.3 percent of the country's outstanding shares. The government will not likely act to help them.

For Mr. Suzuki, his drive to invest in big companies went to an extreme, and now he had modest plans for his stock shares.

``I will put them in the safety deposit box for the next one year and check the price then,'' he says.