Trump policies to extend Japan stock rally in 2017, Nomura says

[TOKYO] Policy pledges by US President-elect Donald Trump are bullish for Japanese share prices, which will build on their recent gains in 2017, according to Norikazu Akedo, a senior managing director at Nomura Holdings Inc's brokerage unit.

Mr Trump's election win was a "great turning point" for Japan equities, due to his commitments to invest in infrastructure and cut taxes, said Mr Akedo, 50, who is also joint head of global markets Japan at Nomura, the country's largest brokerage firm.

Nomura has predicted that the Nikkei 225 Stock Average will rise to between 20,500 to 21,000 points by the end of next year, as much as 14 per cent above Friday's close of 18,381.22, according to a forecast issued Nov 18.

The probability is "not so little" that the index will exceed the view "to a large extent," Mr Akedo said in an interview, while declining to give a precise prediction.

Japanese investors, however, have lagged behind international investors in interpreting the Trump win as bullish for the local market.

"Foreign investors have been fairly aggressive to purchase Japan stocks since the US presidential vote, while the temperature of local investors is rather mild," said Mr Akedo.

Purchases of Japanese equities by foreign investors at exchanges in Tokyo and Nagoya exceeded sales by 891 billion yen (S$ 11.143 billion) between Nov 7 and 18, while Japanese insurers, banks and asset managers' sales surpassed purchases by 304 billion yen, according to Japan Exchange Group Inc.

Currency market moves are also supportive for Japanese equities.

"We could expect the trend of a weakening yen a bit longer," Mr Akedo said.

"As a result, Japanese companies can improve their earnings, which will give a positive impact on their share prices."

This week, Nomura is due to host its annual investor conference where executives of 276 companies, including Nippon Telegraph & Telephone Corp chief executive officer Hiroo Unoura, will discuss their business strategies.

Some 1,800 investors have registered to attend, including 1,200 Japanese and 600 from overseas, compared with 2,100 a year earlier.

BLOOMBERG