Friday, September 6, 2013
STOCK FOCUS: Overseas Investors Likely To Keep Stocks Buoyant
TOKYO (NQN)--Overseas investors are once again showing strong interest in Japanese stocks, and their money is expected to continue flowing into the market.
As many securities firms are taking advantage of this trend by holding seminars for investors, Nikkei Quick News asked Motohisa Ichikawa, head of a global equity sales department at Daiwa Securities Co., which will organize such events on Sept. 13 and 17, about his views on foreign investors' investment stances.
Ichikawa said expectations that Tokyo will win its bid to host the 2020 Summer Olympics are increasing. If another city wins, said Ichikawa, stock prices for construction, property and other firms will fall in the short term.
When taking a longer-term view, many investors are positive on the outlook for shares in companies strongly linked to domestic demand, he said. Ichikawa said investors are likely aware that financial and real estate firms will benefit most from a rise in GDP in the financial sector, which the ruling Liberal Democratic Party is advocating.
The analyst said many overseas investors who run global macro funds as well as investors who were well familiar with Japan invested in Japanese stocks around November last year. He also said that "long-only" investors, who take only take long positions, gradually increased purchase of Japanese shares later on. During the period when the Nikkei Stock Average rose from 14,000 to nearly 16,000 in May, some overseas investors bought undervalued stocks and later sold them to lock in gains, he said.
However, Ichikawa said positive factors are spurring investors to steadily buy stocks on dips, citing the ruling party's control of both houses of the Diet and relatively solid corporate earnings.
Movement in futures trading has led to volatility in Japanese stocks, the analyst said. He said overseas investors taking medium- to long-term positions have likely determined that now is not the right time to significantly change their positions, as they are keeping an eye on China's shadow-banking issue, the conflict in Syria and the U.S. Federal Reserve's moves regarding scaling back its quantitative monetary easing.
Despite such risk factors, said Ichikawa, investors showing a positive view on Japanese stocks outnumber the skeptics. He also said "long-only" investors are looking for trading cues to increase their purchases. Many overseas investors are holding onto Japanese stocks and ignoring slight fluctuations, the analyst said.
Ichikawa said high expectations for the government of Prime Minister Shinzo Abe are helping direct money into stocks. He said a consumption tax hike would inevitably have a negative impact on the economy, but that the extent of the impact can be calculated to some extent.
Failure to implement the government's policy plans could cause huge trouble for long-term investors who buy Japanese stocks on a 10-year cycle. If the government postpones the consumption tax hike, there is a danger the government will be seen as not serious about bringing change, Ichikawa said.
-- Translated from an article by NQN staff writer Junichi Yanai
(Nikkei Quick News, Sept. 6)