Nomura's Individual Investor Survey for September: Cautious Optimism

The securities arm of Nomura Holdings (NMR) has released its September survey of individual Japanese investors (for direct access to .pdf click here). This month's survey shows that individual investors continue to be mostly optimistic with 78.1% out of 1,000 respondents expecting the Nikkei 225 to rise over the next three months (see detailed breakdown below). However, Nomura finds that investors are simultaneously cautious, especially in terms of market expectations following the Nikkei's recent rise.

Extracts from Nomura’s Individual Investor Survey

Area of investment focus: Stock price movements and technical factors (13.0%, -0.7% month-over-month), Strong earnings growth (14.5%, +0.6%), Stable earnings growth (46.5%, +0.1%), Dividends and shareholder returns (26.0%, unchanged)

Overview:

    (1) Outlook on the stock market continues to be mostly positive but a cautious approach prevails. Also note that the Nikkei 225 gained nearly 1,400 points from last month's survey (16,163 vs. 14,794), which is seen as limiting near-term gains, thus the decrease in respondents for higher-level N225 gains — 78.1% of the respondents (versus 80.7% last month) said they expect the Nikkei Average to rise during the next three months. Nomura gauges responses in 1,000 point N225 increments and of those expecting a rise, 48.0% (vs. 37.8%) responded for +1,000, 24.1% (vs. 33.3%) for +2,000, 4.2% (vs. 6.9%) for +3,000 and 1.8% (vs. 2.7%) for >+3,000.

    (2) Among market impact factors, geopolitical risk is once again the biggest concern for investors but overall, all factors including geopolitical had lower negative and more positive responses, representing an "encouraging sign" for the overall picture.

    (3) Information & telecommunications fell to the second choice as the most appealing sector with Resources taking the top spot; Pharmaceuticals & healthcare maintained the 3rd position

Least appealing: Resources was once again chosen as least appealing despite also being most appealing; Electricity & Gas was 2nd after not making the top-3 last month; Financials maintained the 3rd position, and Construction & Real estate fell out of the top-3

    (4) In the survey's feature question respondents were asked whether they exercised voting rights in June at general shareholders' meetings. Approximately half of the respondents voted on at least some of their stocks held and among those, two-thirds voted in favor of all resolutions. The most opposed resolutions were: director compensation, director retirement bonuses, and distribution of profits.

Top-5 Most Watched Stocks: (survey respondents were only allowed to choose 1 stock; Japanese tickers are 4-digit codes)

    • Toyota (ADR: (TM), 7203) *also #1 last month
    • Softbank (OTC: (SFTBF.PK), 9984) *also #2 last month
    • Sony (ADR: (SNE), 6758) *#5 last month
    • Canon (ADR: (CAJ), 7751) * not in top-5 last month
    • SBI Holdings (8473) * not in top-5 last month
    • Nippon Steel (5401) *#6 this month, #4 last month
    • Tokyo Electric Power (9501) *#7 this month, #3 last month