Japan: Nomura's September Individual Investor Survey

The results of Nomura’s Individual Investor Survey [pdf] for September (released earlier this month) show an improvement in sentiment for the first time in three months, as share prices are expected to recover, although, there's a growing "wait-and-see" stance among investors.

Japanese stocks continue to struggle into September, with indices putting up negative calendar year returns, compared to double-digit gains for other regional indices (full story).

Nomura closed its survey on August 23, at which time the Nikkei 225 was recovering from heavy selling induced by U.S. credit market concerns -- the N225 fell to a year-to-date low of 15,273 on Aug. 17, compared to its ytd highs of 18,252 (close) set Jul. 10 and 18,300 (intra-day) on Feb. 26). The N225 gained more than 400 points on Aug. 23 to close at 16,316.

The N225 climbed 300+ points on Friday to 16,127, to recover the 16,000 again after seven trading sessions.

Nikkei 225 Stock Average chart as of Friday's (9/14) close:

Nomura's September survey shows investors' concerns over market and psychological factors, as well as overseas factors, grew since the prior month's survey -- obviously impacted by the increased volatility of trading with market participants keenly watching developments in the U.S.

Extracts from September's survey:

Most Appealing Sectors:

1. Materials (7th consecutive month at #1)

2. Pharmaceutical & Health care (not among "most/least-3" last month) -- Nomura says its #2 ranking "reflects the deterioration in the (stock) market"

3. Machinery, Shipbuilding & Heavy Machinery (second "most" last month)

Least Appealing Sectors:

1. Financials (third "least" last month)

2. Construction & Real Estate (second "least" last month) -- see Japanese Property: Fear Has Overcome Greed

3. Autos & Auto Parts (not among "most/least-3" last month) -- Nomura says its #3 ranking likely reflects "the difference in sensitivity of earnings to forex fluctuations"

In its monthly feature question, Nomura asked investors which financial products they were interested in, and why. The most common response was "domestic stocks", because of familiarity. Nomura says it thinks "domestic stocks have become more familiar to individual investors with experience in trading equities." That might sound strange, but the method or approach to investing in Japan is somewhat different than in the U.S. Many Japanese individual investors rely on the same published materials, such as quarterly stock data books and weekly investing magazines. In the worst scenario, investors are following too closely the published stock price targets for buying and selling. That said, Nomura mentions forex margin trading "moved up the ranking" as it appears investors looking for high returns increasingly tend to look overseas instead of at domestic products.

Most-watched Stocks (top-10):

1. Toyota (TM) (JP: 7203) -- see Merrill Likes Toyota Even With Strong Yen
2. Nintendo (NTDOY.PK) (JP: 7974)
3. Nippon Steel (JP: 5401)
4. Tokyo Electric Power (JP: 9501) -- see Tokyo Electric Power Gains Attention from Individual Investors
5. Softbank (SFTBF.PK) (JP: 9984)
6. Sony (SNE) (JP: 6758)
7. Komatsu (JP; 6301)
8. Mitsubishi Corp. (JP: 8058)
9. Toshiba (TOSBF.PK) (JP: 6502)
10. Mizuho Fin. Grp. (MFG) (JP: 8411) -- see Preparing To Put Money To Work In Japan

*ADR honorable mentions:
• Sharp (SHCAY.PK) (JP: 6753)
• Honda (HMC) (JP: 7267)
• Mitsubishi UFJ Fin. Grp. (MTU) (JP: 8306)
• Nomura Hldgs (NMR) (JP: 8604)
• Canon (CAJ) (JP: 7751)

Disclosure: The author does not own shares of any companies mentioned in this article.