“Mrs. Watanabe” returns to the battlefield! The AI bull market sparks a frenzy among Japanese retail investors as the daily trading volume of Japanese stocks surges past 10 trillion yen

Japanese retail investors, once globally renowned for their enthusiasm for forex arbitrage trading—known as the “Mrs. Watanabe”—are now shifting their focus from exchange rate differences to the capital markets of the AI era. Their participation has surged to the highest level in decades, and with it, market volatility has increased significantly.

According to data from JPX, the parent company of the Tokyo Stock Exchange, for the first three weeks of May, the average daily trading value on the TSE prime market exceeded 10 trillion yen (about $63 billion) for the first time. Offshore funds and domestic investors are fiercely betting on Japanese technology companies, seeing them as "arms dealers" set to benefit from the AI wave and the chip race, together driving share prices to record highs.

This trading volume boom has coincided with a rapid expansion in off-exchange trading. Brokerage firms note that retail investors’ impact on market trends has reached unprecedented heights. Oki Matsumoto, founder of Monex, one of Japan’s largest online brokers, said the “AI boom” has swept through Japan’s retail investor segment, bringing large numbers of investors into the market. Retail investor activity in Japan is now at an all-time high.

Analysts warn that Japan’s stock market was already one of the most momentum-driven markets globally, and the continued growth in the retail segment is further fueling volatility. Especially in the recently concluded earnings season, individual stocks were harshly punished for even slightly missing expectations.

According to TSE data, the retail share of trading on the Tokyo Stock Exchange has steadily increased for over a quarter century, reaching 25% in 2025—the highest level since the bull market triggered by Abenomics.

However, Jefferies analysts suggest the actual rise in retail trading may be underestimated. TSE data does not include volumes from the fast-growing proprietary trading systems—i.e., off-exchange trading platforms—that are attracting more and more retail funds. Incorporating data from alternative venues, Jefferies analysts estimate that, in April this year, retail transactions combined with alternative exchange volumes accounted for 39% of total market trading.

Japan’s off-exchange proprietary trading platforms are mainly dominated by Japannext and Japan Alternative Market (JAX), both of which have established partnerships with online brokers like Rakuten Securities, SBI Securities, and Monex. According to Takeya Kamei, CEO of JAX, about half of the platform’s trading volume comes from retail investors, while the rest is primarily from high-frequency market makers offering liquidity. Notably, the TSE’s official statistics also do not fully include certain margin trading by retail investors—these are often categorized as “brokers.”

Analysts caution there is some risk of double-counting in the above data, but the overall trend indicates that Japanese retail participation has rebounded to rare levels not seen since the asset bubble era of the 1980s.

Oki Matsumoto describes the current market as “institutions set the overall direction, but the volatility is made by retail investors”—large institutional investors still dominate overall trends, but intraday fluctuations and price elasticity are increasingly driven by the coming and going of retail funds.

Jeff Hutchins, head of Japanese equity trading at Jefferies, said: “The rise in Japanese retail trading volumes is a major transformation. The market used to be dominated by international institutions, but now there are new guests at the party. We’ve already seen the impact this earnings season.” He added:

“Any Japanese company with positive momentum, especially in tech and AI, will see its share price hit hard even for a slight guidance cut.”

Against this backdrop, stocks such as Nitto Boseki, Mitsui E&S, Seikoh Giken, Ajinomoto, Furukawa Electric, and Fujikura are all seen as notably influenced by retail investor behavior.

Oki Matsumoto points out that, in the past, the largest retail trading volumes were in ETFs tracking the major indices. Today, however, AI-related stocks like Furukawa Electric and Fujikura have surpassed those figures. "Retail investors are no longer just buying the broad market—they’re picking individual stocks, which is highly unusual,” he said.

The expansion of retail trading volumes aligns with Japanese government policy objectives. Authorities are actively encouraging residents to shift their savings from bank accounts to higher-yielding investment products in order to address pension pressures from an aging population, and also in line with rising domestic interest rates.

In terms of market infrastructure, off-exchange proprietary platforms are developing rapidly in Japan. Ten years ago, alternative venues accounted for only a single-digit share of total market trading. Since then, regulators have explicitly supported these platforms to foster market competition. Industry insiders note this has had a positive impact on retail trading costs.

However, one notable structural phenomenon is that, despite increased retail participation, on the Tokyo Stock Exchange level, retail investors overall remain net sellers—indicating that some households are capitalizing on rising share prices by gradually reducing their long-held positions. Traditionally, the main source of net buying on the Japanese market comes from foreign institutional investors and domestic corporations.