Japan didn’t have a particularly nice start to the year (although regular readers will be pleased to note they made as much on their gold mining shares as they might have lost on their Japanese equities – there is something in this insurance idea).
However, we remain as bullish as ever.
We know there is more quantitative easing (QE) coming. We know that Japan is one of the few places where earnings momentum is on the up. We know that stocks remain good value. How can there not be value in a country where fully 50% of the stocks listed on the main index (TOPIX) are not covered by a single analyst? Quite.
But there is one more thing that is making us come over even more positive than usual – NISAs (‘Nippon ISAs’). Jonthan Allum of SMBC Nikko has looked at who has been buying stocks over the last month (as dim witted foreigners have been dumping them).
The answer is Japanese individuals. Net individual buying in January hit an all-time record of ¥1.427trn. That, says Allum, could be just down to an admirable tendency to buy on weakness. But it could also be down to the fact that since the tax free saving vehicles were introduced 2.75 million people have opened accounts, and 470,000 of those have already begun to invest. How much? According to the Nikkei newspaper, not far off ¥300bn already. That’s not a bad start at all.