Japanese Investors Cheer Up About Equity Market Outlook - Nomura

Tom Burroughes Group Editor 16 November 2015

Japanese Investors Cheer Up About Equity Market Outlook - Nomura

A monthly barometer of Japanese investor sentiment shows a rise in optimism about market prospects.

Japanese investors grew more optimistic for equities in November compared with how they were thinking about the market in October, saying that international events had the biggest impact on market behaviour, while domestic factors grew more important, a survey shows.

The monthly survey of investors by Nomura, the Japanese financial group, showed that its Nomura Individual Investor Market Index, which is based on 1,000 respondents’ three-month outlook for share prices and calculated by subtracting the percentage of responses for “fall” from that for “rise”, was 51.8 in November, up 3.0 points from October. The level is the highest since May this year, when it was 52.

The investors were asked to choose the most important driver on stock market returns in the next three months. Top of the list were international affairs, but the response rate on that point fell, while response rates for domestic corporate earnings, foreign exchange trades, domestic Japanese interest rates and market and other factors all rose from October, Nomura said.

On the outlook for the dollar/yen exchange rate over the next three months, the combined percentage of respondents expecting the yen to appreciate against the dollar was 51.3 per cent, up 1.6 percentage points from the previous month (49.7 per cent). The response rate for "rise of more than ¥10 against the dollar" was 3.5 per cent, up 1.4ppt from the previous month, and that for "rise of about ¥5 against the dollar" was 39.2 per cent, up 0.7ppt.

Meanwhile, response rates fell across the board for options where the yen was expected to weaken against the dollar.

The combined proportion of respondents expecting the Nikkei Average of equities to rise over the next three months was 75.9 per cent, up 1.5ppt from the last survey (74.4 per cent).

The bank indicates investor plans for holding financial instruments by calculating diffusion indices, or DIs, for each type of instrument by subtracting the percentage of respondents planning to cease holding the instrument or decrease their holding from the percentage planning to hold the instrument for the first time or increase their holding. 

Japanese equities remained the most appealing financial instrument in November with their DI rising 0.3ppt month-on-month, while the DI for foreign investment trusts rose 0.6ppt month-on-month to 6.3. In contrast, Japanese investment trusts saw the largest decline, of 2.7ppt month-on-month to 13.3. The DIs for cash and deposits and foreign equities also saw declines, of 1.5ppt and 1.3ppt month-on-month.


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