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2021.02.12

Strong sentiment on Japanese stocks: Survey shows Nikkei 225 at the highest point since the poll started. - QUICK Monthly Survey (Equity)

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Market participants are turning bullish on the outlook for Japanese stocks, with the average forecast for the Nikkei 225 at 28,190 at the end of February, according to the QUICK Monthly Survey (Equity) for February. The end-of-month forecast was the highest since the survey started in April 1994 and represented the seventh consecutive month of rises. Expectations are increasing for vaccinations against the new coronavirus and additional economic measures in the U.S.

The survey was conducted from 2 to 4 February, and the Nikkei 225 closed at 28,341 on 4 February. At the end of the week on 8 February, the Nikkei 225 rose 609 to 29,388, recovering to the 29,000 level for the first time in 30 years and six months and exceeding bullish market expectations.

The most important factor for stock price fluctuations was the "Economy and corporate earnings" at 52%, followed by "Interest rate trends" and "Overseas stock and bond markets" at 15% each. Many respondents said that a variety of factors would lead to higher stock prices, agreeing that "Progress in vaccinations for the new coronavirus and the normalization of behaviour are important" and "Expectations of U.S. fiscal expansion are a strong tailwind for Japanese stocks" (Investment trust advisor). On the other hand, some bankers said that the rise was driven by expectations and that the stock market would be in a "Strong adjustment phase in the near future" due to caution about the rapid rise in stock prices.

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TSE and the Financial Services Agency plan to revise the Corporate Governance Code this spring. The revised draft proposes measures to ensure the functioning of the board of directors and the diversity of core personnel. When asked what measures respondents thought would be effective in the survey, the most common answer at 40% was "Establishment and improvement of the performance of highly independent nominating committee (statutory and voluntary)," followed by "Companies listed on Prime market appoint at least one third of independent outside directors" at 32%.

The most important theme for future discussions, at 44%, was "Capital efficiency," including a review of business portfolios and policy-holding shares. "Strengthening group governance" and "Consideration of mid-and long-term sustainability" were each selected as the most vital by 23% of respondents.

Some respondents pointed out that they believed "The ESG trend is a bigger theme than the CG Code for asset owners (Institutional investors serving as trustees)" (Securities company) and that "Professional managers will not be fostered unless we start by reforming the sense of equality, such as with uniform treatment when hiring new employees" (Bank).

The survey was conducted among 214 people, including investment managers of domestic institutional investors, and the number of respondents was 130. The survey was conducted from 2 to 4 February.

QUICK Data Factory(QUICK Monthly Survey)
https://corporate.quick.co.jp/data-factory/en/product/data012/

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Since its founding in 1971, QUICK has become Japan's largest financial information vendor, and has developed an information infrastructure that supports Japan's securities and financial markets. It delivers high-value global market information from a fair and impartial perspective to a wide range of customers including securities firms, banks, institutional investors and corporations.

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