Japan equity volumes triple after earthquake

Trading platforms are holding up so far, despite a huge sell-off-induced spike in volumes across stocks and stock futures, says agency broker ITG.

Trading volumes have jumped threefold on Japanese stock markets since Friday’s earthquake and tsunami, but platforms are holding up so far, says Clare Rowsell, Asia-Pacific head of client relationship management and marketing at agency broker ITG in Hong Kong.

Volumes have risen from 1.95 billion shares traded in Topix index stocks on Thursday to 5.7 billion yesterday, by the close. The Topix closed on Tuesday down 16.3% for the week, its worst two-day losing streak since the global equity crash of October 1987.

That said, there is opportunistic buying going on – there are certainly still some buyers at these levels, both domestic and foreign, says Rowsell.

Japan equity futures markets are also falling particularly fast, and at times quicker than the spot market. This perhaps reflects longer-term pessimism on how quickly the markets might recover, says Rowsell. She cites an announcement earlier today that radiation leaks may be worse than they first thought – this may have triggered longer-term concerns, causing opportunistic buyers to scale back activity.

From a systems perspective, the exchanges in Japan were very quick to respond and open the markets on Monday to continue trading, she notes. However, several stocks have not been trading because of extreme price movements. These include Tokyo Electric Power Company, which owns the Fukushima nuclear plant, and certain related stocks.

Alternative trading venues are also continuing to offer normal service for the time being. For example, SBI Japannext put out an announcement on Sunday night about its contingency plans, noting that it will continue to operate. “But the situation is changing minute by minute,” she adds.

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