Investors to Buy Japanese Stocks - Global News | Financial Buzz

Investors to Buy Japanese Stocks

AMP Capital, Investors, Tokyo, Japan, InvestorsAs the bets get stacked up against Japanese stocks, investors with a formidable $293 billion in client assets, view the pessimism as a code to buy. History says that such a sentiment is correct.

The bourse of Tokyo saw a record spurt in short selling in October, as there was a 7.7 percent drop in the Topix index from September’s six year high. According to Bloomberg compiled data, the shares have strengthened at a median of 9.7 percent spread over three months after the increase in bearish bets from 2009.

Optimistic views

For AMP Capital Investors, a Sydney-headquartered concern, this is a reason for optimism; another being the company’s profit outlook. Steps taken by the government to push a floor under the Japanese equities could prove to be lethal for those who short-sell. The Japanese central bank has announced that it is all ready to put in stimulus if the Japanese economy stutters. A Nikkei newspaper, on October 20, reported that the $1.2 trillion fund of the nation could be utilized to purchase local shares rumbled Topix from its three week long rout.

According to Nader Naeimi of AMP, fear is pulsing at its highest levels and it is the best time to enter the market. Naeimi helps in managing about $125 billion worth of assets in the company and also has the dynamic asset allocation unit. He opines that when excessive pessimism is displayed by the sentiment indicators, it shows that things have reached the bottom.

According to Bloomberg compiled data, about 36.6 percent of the total transactions on the Tokyo Stock Exchange on October 14 were accounted for by bearish bets. This is the peak since the Tokyo exchange began to publish the figures from 2008. On October 24, the ratio came to 33.4 percent. Topix rose 1 percent to end at 1,254.28.

Rise of pessimism

Pessimism spread all around as Japanese equities suffered assaults from outside the country. Topix dropped 12 percent in three weeks ending October 17, thus meeting the description of correction, as the specter of a world economic slowdown and the Ebola virus caused a fall in the global economy. The option prices gauge, Nikkei Stock Exchange Volatility Index, increased to an eight month high on October 17.

The strengthening of the Yen saw huge losses in Japanese stocks. The European and the US benchmark gauges fell by about 6.9 percent and 4.9 percent respectively during this period.

According to John Vail of Nikko Asset Management Co, when it comes to Japan, the markets show extreme pessimism. He said that corporate profits may hold positive surprises. Nikko Asset Management controls approximately $168 billion of investors’ assets.

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