This summer market is not summer doldrums but a strong expectation of a summer rally! [From Tomio Sugimura's newsletter]
From the investment newsletter “Sugimura Tomo’s Investment Salon” by Sugimura Tomo, provided by GogoJungle, here is a small excerpt from what was delivered today.
The probability of the Nikkei Stock Average rising after the Upper House election is 74%!
The current market is not very clear. The upcoming House of Councillors election is reported to be “pro-government favored.” This is the forecast from various polls, but at this point it is not very reliable. Voting behavior of floating voters, who account for about 20–30%, can work against expectations.
Well, in any case, after the July 22 election, the summer market (summer rally) will begin. By the way, if you look at the year-end performance of the Nikkei after elections since 1950, it has been 17 wins and 6 losses (win rate 73.9%).
The uncertainty before and during the election is erased after the election. Also, needless to say, the Japanese market has been lagging. While the U.S. market has a PER of 17.2 times and a PBR of 3.16 times, the Nikkei Average’s PER is only 12.1 times and PBR is 1.06. It seems this correction may occur from summer to autumn.
Although not very noticeable, foreigners have been steadily accumulating mid- and small-cap stocks since late June. This trend has been seen in past national elections. The 2017 lower-house election (voting/opening on October 22) is a representative example. In that scenario, the Nikkei rose for 16 consecutive sessions after the election. This time, there is high expectation that the same pattern will be recreated. Won’t it?
“Sugimura Tomo’s Investment Salon” (Sugimura Tomo)quotes.
Mr. Sugimura is focusing on the high rate of increase in the Nikkei after the Upper House election. In addition, compared with the U.S. stock market, the lower PER and PBR of the Japanese market may be revised upward after the election. With the election day approaching this weekend, considering long-term stock picks with a view to the summer rally might be good. (Editorial Department)
