There are no investors to lead the stock-price rally — Mr. Hiroshi Kouya

Release date: 2017/03/04 10:00

End investors are net sellers.

The month-by-month net buying/selling by investment entities for January and February is as follows.
It is shown below.

(Monthly net purchases/sales, in billions of yen)
January　　February
Foreign investors　　+ 325　　-2,567
Individuals　　　　　-3,569 0
(Cash) -5,030 -2,568
(Credit) +1,461 +2,568
Corporates　　　　　-2,010　　-2,310
(Trust banks)　+428　　-1,747
(Commercial law)　+45　　+1,418

Proprietary trading　　　+5,571 +4,885
(BOJ/ETF)　+5,624 +4,927

The year-to-date range-bound market has continued, but the
reason is also clear from the above supply-demand relationships.
There are investors continuing to buy, led by individuals' margin trading and corporate stock buybacks,
but in the broad category of individuals and domestic corporations, net selling remains.
For October–December, overseas investors who bought heavily have also turned to net selling.




'Buyers' are only the BoJ.

Broadly speaking, all end investors are net sellers.
As a result, the balancing role in supply and demand is performed by proprietary trading.
The net buying amount by proprietary trading is about the same as the BoJ's ETF purchases.

Purchases for ETF construction are the only net buying in the cash market.
That means the BoJ is the sole net buyer.
It is clear that the BoJ is helping to support stock prices, but the BoJ, which only acts when prices fall, cannot be expected to push prices higher.



Apart from overseas players, there are no investors who would push prices higher.
That is the conclusion.
Last year, in almost all cases where overseas players bought heavily, the yen weakened.

If we do not await a combination of yen depreciation and overseas net purchases, there will be no momentum for prices to rise.


Last year overseas players net-sold more than 5 trillion yen through March, then turned to net buying in April.
Over Oct–Dec, overseas investors net bought more than 5 trillion yen in total in cash and futures; after a three-month pause, a comeback around April is a plausible scenario.





Unless something unforeseen happens, there is no need to worry about a break below support, but it may take a little longer to break above.