Japan Margin Trading Doubles in Six Months as AI Stocks Drive Retail Leverage to Record Highs
Nashnova编辑部
Japan's margin trading hit ¥123 trillion in July, more than doubling from roughly ¥50 trillion six months earlier and setting the highest monthly total since comparable TSE data began in 2016 — fueled by retail traders piling leverage into volatile, high-priced AI stocks led by Kioxia Holdings.
How big is ¥123 trillion?
Combined margin buying and short-selling in July reached ¥123 trillion, matching June — itself already the highest month on record since TSE comparable data began in 2016.
Six months earlier the monthly run-rate was roughly ¥50 trillion. The figure has more than doubled.
Margin trading accounted for 83% of all retail equity turnover in July, also a record. This means → for every ¥5 retail investors traded, more than ¥4 was borrowed money.
Why are AI stocks the leverage magnet?
Matsui Securities chief market analyst Tomoichiro Kubota said wild price swings in popular AI names — Kioxia Holdings (鎧侠控股) above all — have spurred a wave of short-term spread-trading.
Kioxia's outstanding margin-buy position stood at 13.23 million shares, worth roughly ¥631.5 billion at the day's market price.
AI-related stocks generally require a large minimum investment per lot. In plain terms = one round lot is expensive, so retail traders turn to margin — which lets them take positions at roughly three times their own capital.
How lopsided is the bullish bet?
Outstanding margin-buy balances across Tokyo and Nagoya stood at ¥6.27 trillion, down from a record above ¥7 trillion at end-June but still elevated.
The margin ratio — long positions divided by short positions — sat at roughly 8. This means → for every ¥1 betting on a decline, ¥8 was betting on a rise. Bulls dominate.
When AI names fall, some margin holders are forced to close, but others step in to buy the dip — the bull camp rotates members, yet the directional bet holds.
Are retail traders making or losing money?
The margin profit-loss ratio — a gauge of unrealized gains and losses — briefly turned positive in June, a rare occurrence.
By end-July it slipped back to −8.4%, still in the red but better than the ten-year average of −10.2%.
This reflects a market where retail leverage is high but average cost bases have not yet drifted far from market prices — a state of "slightly underwater, not yet broken."
Where is the risk?
Retail investors accounted for over 30% of total broker turnover in June. They tend to trade contrarian, providing a cushion when markets weaken.
But the rapid buildup of margin longs carries a latent risk: a sharp drop could trigger forced liquidations that cascade and amplify the sell-off.
In plain terms = leverage cuts both ways — it accelerates gains on the way up and losses on the way down. The more traders who bought on borrowed money, the more crowded the exit becomes in a stampede.
Content is for reference only, not financial advice.