Report type: Weekly Strategy
What Will Be the Trend for Stock Prices in the Remaining 2 Months This Year?
In the Japanese stock market in the week of 28/10, with important events ahead such as the US FOMC and the Bank of Japan’s Monetary Policy Meeting, etc., as well as the Dollar showing a high price trend largely attributed to good financial results in major US companies and expectations towards progress in the US-China trade friction issue, the Nikkei average was strong, such as by marking 23,000 points at one point on 29/10. Despite important events passing by smoothly, from 31/10, due to a consecutive worsening of US and Chinese economic indicators and a decline in the US long-term interest rate, the dollar/yen exchange rate saw the yen appreciating at one point by falling under 108 yen, with the Nikkei average also falling to 22,705 points.
In the Jul-Sep term financial results, since many companies appeared to be prepared for risks especially from the US-China trade friction this term, we can infer that the full year business results forecast in industries which are thought to be heavily affected by the US-China issue gravitated towards the conservative side. Market forecasts also likewise overly took into account US-China risks, which tended to be at a low level. As a result, on one hand, stocks which did not necessarily have good business performance were purchased, whereas stocks taking expectations into account and which were bought beforehand that showed good business results ended up being sold, etc., hence, it has been difficult for market participants to predict stock prices after the release of financial results. For example, financial results of both NEC Corporation (6701) and Fujitsu (6702) announced on 29/10 fared well, and both share the common aspect of following the 5G-related trend, however, their stock prices took a drastic turn one day after the release of financial results. Also, for the financial results of Advantest (6857) which was announced on 30/10, despite significantly revising their full year income forecast upwards, their stock prices fell sharply the next day. Rather than focusing on immediate business performance, perhaps it may be necessary to select stocks by looking two or three steps ahead.
There are only 2 months remaining in 2019, and looking at the Nikkei average in the past, in Dec 2015, it fell significantly due to the “China Shock”. In 2016, it was strong from the US presidential election in Nov up to the end of the year. Also,
In 2017, despite it being strong from Sep to early Nov due to the snap election, it plateaued after until the end of the year. In 2018, it fell drastically between early Oct and late Dec. For this year, although it seems to show movements similar to 2017 based on the changes from Sep onwards, judging by the demand trends involving spot and futures arbitrage, it can also be seen as similar to 2016. However, with the presence of new risks involving the US-China trade friction issue and being currently faced with concerns on the Japanese economy due to the consumption price hike to 10%, it would be rash to simply expect it to turn out the same as it did in the past. We wonder what year-end stock market awaits us.
In the 5/11 issue, we will be covering Calbee (2229), Takamiya (2445), Oenon Holdings (2533), Sony (6758), SCSK (9719) and INES (9742).
Important Information
This report is prepared and/or distributed by Phillip Securities Research Pte Ltd ("Phillip Securities Research"), which is a holder of a financial adviser’s licence under the Financial Advisers Act, Chapter 110 in Singapore.
By receiving or reading this report, you agree to be bound by the terms and limitations set out below. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.
The information and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this report has been obtained from public sources which Phillip Securities Research believes to be reliable. However, Phillip Securities Research does not make any representation or warranty, express or implied that such information or Research is accurate, complete or appropriate or should be relied upon as such. Any such information or Research contained in this report is subject to change, and Phillip Securities Research shall not have any responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith.
Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this report are as of the date indicated and are subject to change at any time without prior notice. Past performance of any product referred to in this report is not indicative of future results.
This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This report should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgment. The fact that this report has been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this report is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this report involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.
Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this report should take into account existing public information, including any registered prospectus in respect of such product.
Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities), brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have participated in or invested in transactions with the issuer(s) of the securities mentioned in this report, and may have performed services for or solicited business from such issuers. Additionally, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have provided advice or investment services to such companies and investments or related investments, as may be mentioned in this report.
Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an adverse effect on the value, price or income return of the investment.
To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may at any time engage in any of the above activities as set out above or otherwise hold an interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this report. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, which is not reflected in this report, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the issuance of this report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of this report.
The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction.
This report is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The products mentioned in this report may not be suitable for all investors and a person receiving or reading this report should seek advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products.
This report is not intended for distribution, publication to or use by any person in any jurisdiction outside of Singapore or any other jurisdiction as Phillip Securities Research may determine in its absolute discretion.
IMPORTANT DISCLOSURES FOR INCLUDED RESEARCH ANALYSES OR REPORTS OF FOREIGN RESEARCH HOUSE
Where the report contains research analyses or reports from a foreign research house, please note:
