Nomura: Japanese Investors Bullish on the Dollar and Domestic Equities

The firm's individual investor survey also addressed investor views regarding FX trends and international affairs

Nomura Securities, a Japanese securities dealer, released its Individual Investor Survey for June of 2018 this Thursday. Some of the results reflected Monex’s retail investor survey, released last week, as investors were bullish on the US dollar and somewhat positive with regard to Japanese equities.

Today’s survey had approximately 1000 respondents, all of them based in Japan. As with Monex’s survey, respondents were asked to predict market behavior for the next three months.

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The respondents were given one day to reply, from the 11th to the 12th of June. In terms of age, 45 percent were above 60, and only 0.5 percent were under 30. A large number of respondents (43 percent) were public servants or ‘company employees,’ but a significant number (26 percent) were also pensioners or unemployed.


Of the total respondents, a sizeable proportion saw the US dollar as being the most appealing currency to invest in over the next three months. Survey participants were given a choice of eight currencies, as well as an ‘other’ option, to choose from.

They were then asked to pick one currency as the most appealing and another as the least appealing. Those choosing ‘other,’ for either case, had to specify what currency they were really choosing.

The results show that approximately 41 percent of survey participants chose the dollar as the most appealing currency to invest in. The Chinese Yuan was at the other end of the spectrum as 36 percent of investors listed it as the least appealing currency to invest in over the next three months.

Nomura ranks the appeal of the different currencies using a diffusion index (DI). This DI is formed by subtracting the percentage of people who said a currency was least appealing from the percentage that said it was most appealing.

In this most recent survey, the US dollar had a DI of 31.8 percent. This was a substantial increase on the previous survey, held in March of this year when it was 16.3 percent.

International Affairs

The bullish sentiment of the survey participants with regard to the US dollar could be viewed as somewhat surprising. The reason for this is that these same participants also stated that international affairs were most likely to shape stock market behavior in the next three months.

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Out of the total number of responses to the survey, approximately 68 percent stated that international affairs would have the biggest impact on the stock market over the next three months.

This was not a dramatic increase on the prior survey, in which around 65 percent of survey respondents stated the same thing. It also meant that this view continued to dwarf the other responses regarding the biggest force determining stock market behavior over the next three months.

The only other response that gained over 10 percent of votes was ‘FX trends.’ In the survey released today, roughly 13 percent of respondents stated that this was going to be the most important factor in determining stock market behavior over the next three months.

That was a five percent decrease on the previous survey, in which 18 percent stated that FX trends would be the most important factor in determining stock market behavior. Looked at from a different perspective, this means there was a 28 percent decline in the number of people viewing FX trends as the most significant determiner of stock market behavior.

The responses to this part of the survey offer an array of interesting motives given that the phrase ‘international affairs’ is a fairly nebulous one.

Given the respondents’ positive view of the US dollar, it could mean that, to the shock of lefties everywhere, Japanese investors view US policies in a positive light. On the other hand, it could mean that Japanese investors don’t see US policy as positive but still believe it will strengthen the dollar.

Supporting the home team

Despite their bullish view of the dollar, investors were still extremely keen on Japanese equities as a source of investment. Respondents, who were allowed to make more than one choice, were asked to choose, from a list, the instruments in which they would either be increasing or decreasing their investment.

The most popular investment, by some distance, was in Japanese equities. Just over 54 percent of survey participants stated they would be increasing their investment in them, with 9.7 percent stating that they would be decreasing their investment.

A smaller number of participants, 12.1 percent, said they would be increasing their investment in foreign equities. Only 1.4 percent stated they would be decreasing their investment in foreign equities.

This would suggest that only a small number of participants already possessed foreign equities. Alternatively, it could mean that those that already possessed them were happy to maintain a stable position with no increasing or decreasing in their positions.

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