The so-called Reddit army has sent shares in video game retailer GameStop Corp (NYSE: GME) alternately surging and plummeting over the past weeks. This, as the loosely linked group of retail day traders takes aim at short sellers (those hoping to profit when a company's share price falls) while looking to pocket some quick capital gains of their own.
Yesterday (overnight Aussie time), the GameStop share price surged again, closing up 18%. However, it may well give back some of those gains tomorrow, with shares down 5% in after-hours trading.
While shares like GameStop continue to draw attention from the retail army, it looks like select Asian shares may already be on the radar.
What happened with Bank of Japan shares?
The Bank of Japan (TYO: 8301) shares trade on the Tokyo Stock Exchange's Jasdaq section. And yesterday, the share price rocketed 18%, the daily limit. According to Bloomberg, that's the biggest leap for the Bank of Japan's shares (officially called subscriber certificates) since 2005.
Now the big daily gains didn't come from long-term investors seeking regular dividends, as Japan's central bank pays minimal dividends.
According to Tomoichiro Kubota, a senior market analyst at Matsui Securities Co:
[S]hort-term retail investors don't care about dividends, they're looking just for capital gains. They'll see it as attractive so long as the share price keeps rising and there are buyers.
Caveat emptor
That's good insight there from Kubota.
Many of these short-term retail investors are making decisions based purely on share price momentum. "So long as the share price keeps rising and there are buyers", they're likely to hold or add to their positions.
On the flip side, when the share price starts falling, you often see the Reddit army rush for the exits. Hence some of the big share price falls witnessed by the likes of GameStop following the big runs higher.
As for the Bank of Japan, that's not happening today. After yesterday's 18% lift, shares are up 16% in intraday trading today.
Over the past 5 days, the Bank of Japan's share price has soared 49%.
