Monex Group Inc, a Tokyo-based brokerage offering trading services, has published a survey analyzing retail investors and their future expectations. Titled “Global Retail Investor Survey”, the research looks into what retail investors expect in terms of stock market and foreign exchange pair valuations, as well as future interest rate expectations.
The survey was conducted between August 22nd and September 12th 2014, collating responses from 1,556 individuals trading with Monex Inc (in Japan), TradeStation (U.S) and Boom Securities (Hong Kong).
In the coming three months, “the majority of respondents in the U.S, Japan and Hong Kong expect world stock market prices to increase,” according to the report.
Japanese market participants are most optimistic about U.S equities for the first time in two quarters. Bullish stock market sentiment among U.S retail investors “is at its highest point since this survey was first conducted.” This could reflect S&P 500 rising to an all-time high of 2,007 during the survey period.
When asking U.S and Chinese retail investors which currencies they thought would rise most over the next 3 months, around 50% of U.S respondents answered that the US dollar would appreciate most sharply, compared to 40% of HK investors.
When asking Japanese investors about their forecast for USD/JPY in the coming 3 months, the proportion of retail investors forecasting a weaker yen rose 31% compared to the previous survey in June 2014. The percentage of retail investors forecasting a stronger yen declined 16%.
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When surveying its clients regarding commodities, Monex found that investors in different regions have vastly different views on future commodity prices. While the majority of investors in the U.S. and Hong Kong felt energy markets would broadly rise, Japanese investors have a contrarian view and expect energy markets to broadly decline over the coming 3 months.
For precious metals, surveyed investors in all regions expect a rise in precious metals prices such as gold, silver, platinum and palladium.
Compared to the previous survey, higher percentages of retail investors expect the Federal Reserve to raise interest rates in 2015. However, investors in each region had different views on the timing of rate increases.
The largest percentage of Japanese investors expect the Fed to raise interest rates in the first half, rather than in the second half of 2015. In the U.S. and Hong Kong, the largest percentage of investors expect the Fed to raise rates in H2 2015, rather than in H1 2015. Intriguingly, the largest percentage of Japanese investors expect interest rates will be raised in the first half of 2015, while in the U.S. and Hong Kong, the largest percentage of investors expect a rate hike in the second half of 2015.
In the report, Monex states, “The timing of a rate hike will remain the focus of attention in markets in the autumn and beyond. U.S. monetary policy will have a very great impact not only on the U.S. economy but also on the Japanese economy, exchange rates, and the Japanese stock market, and we would like Japanese investors to pay close attention to it.”