Harrow Kō no Soba o Kiwameru Sōba o Tanoshimu｜Dai 10-kai［Haro no Kō］

Hiroshi Kouno Profile

After joining Nikko Ito Securities (now Mizuho Securities) in 1971, he worked as an analyst 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 the research department and head of the investment department, and later held the position of managing executive officer and head of the trust investment division. He retired in 2012. Since then, he has been active on TV and radio appearances. His market analysis experience focusing on Japanese stocks spans nearly half a century.

Newsletter:https://www.gogojungle.co.jp/finance/salons/8812/

※This article is a reprint/edit of an article from FX攻略.com December 2020 issue. The market information stated in the main text may differ from current market conditions, so please be aware.

※Data is as of the end of September 2020

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This month’s issue focuses on three themes: “Japanese stocks under the umbrella of U.S. stocks,” “Investment indicators for Japanese stocks that hardly grow—price-to-earnings ratio (PER) or price-to-book ratio (PBR)?” and “COVID-19 decline and the subsequent resilience.”

Japanese Stocks Under the Umbrella of U.S. Stocks

“Low growth, prices not rising, wages not rising.” Japan’s stock market does not have strong intrinsic upward momentum, and since 2018 there have been four occasions when the Nikkei Stock Average rose to the 23,000 range; all of these occurred when U.S. stocks hit new highs. As a result, the rise in Japanese stocks occurs when overseas investors feel late to catch up and continue buying Japanese stocks as U.S. stocks keep setting new highs. It’s a sad reality, but the expression “Japanese stocks under the umbrella of U.S. stocks” may be accurate.

Since 2018, the periods when the Nikkei average stayed around 23,000 were January–February 2018, September–October 2018, November 2019–February 2020, and August–September 2020. In the first three periods, once it surpassed 24,000, the upward move seemed to halt as if a goal had been reached, but currently it has not reached 24,000 again, and since U.S. stock new highs seem to have paused, the 24,000 level in this wave may be out of reach.