Hiro? The market expert of the wilderness — Enjoy the market | Episode 9 [Kou No Ko?]
Hiroshi Kougen Wilderness Profile
After joining Nihon Kanyou Kaku Maru Securities (now Mizuho Securities) in 1971, he engaged in analyst work in the Research Department. After a stint in the United States, he consistently conducted information and market analysis on Japanese stocks. In 1996, he transferred to an asset management company (now Asset Management One), served as Head of Research and Head of Asset Management, and held the position of Managing Director in charge of Trust Asset Management Headquarters. He retired in 2012. Since then, he has been active on TV and radio appearances. His experience in market analysis centered on Japanese stocks spans nearly half a century.
Newsletter:https://www.gogojungle.co.jp/finance/salons/8812/
※This article is a reprint/re-edit of articles from FX Strategy.com November 2020 issue. The market information written in the main text may differ from the current market, so please be aware.
※Data is up to the end of August 2020
Looking back at the first half of this year, there is a sense that we were driven by the novel coronavirus, for better or for worse. Under that environment, major countries around the world drastic efforts in fiscal expansion and ultra-accommodative monetary policy unprecedented in history were undertaken simultaneously. Moreover, this extraordinary state is expected to continue for a long time.
If viewed positively, one could judge it as risk-on and a preference for equities, but if viewed skeptically, it could be that the global trend is not to sell equities.
The Nasdaq index has set new highs 25 times between June and August. Investors who sold large-cap tech stocks at the early stage of those new highs have not been given a chance to buy them back. It is understandable that a mood that equities should not be sold easily has taken hold worldwide.
As in last autumn to the beginning of this year, when US stocks were hitting new highs, selling pressure on Japanese stocks also declines, and Japanese stock prices become more resilient. If the current policy and economic environment continues, global stock prices are expected to stay high. Until there are signs of disturbance in US interest rates or US inflation, the upward trend led by Nasdaq will not change in my view.
This month's issue, under the theme “Business Cycle and Stock Price,” will examine the long-term level of Japanese stocks, look at Nikkei 225’s price level in light of the past three years’ movements, and determine from fundamental trends that the risk of a stock price bottoming out is diminishing.
