2024-03-08 10:00:30
An emergency press roundtable was held as the Nikkei Stock Average rose above the 40,000 yen level. Four reporters covering Japanese stocks exchanged their views on issues such as the expiry date of the AI/semiconductor boom and future risk factors.
─Do we need to pay close attention to the US commercial real estate problem and the risk of a strong yen? Exploring the conditions for star stocks in the era of the Nikkei average of 40,000 yen─
The Nikkei Stock Average hit a new all-time high and has since climbed above 40,000 yen. Amidst the sudden rise that most market participants might not have predicted, some are wary of a short-term correction, while others are hopeful that the medium-term upward trend will continue. In a market driven by AI/semiconductor stocks and large-cap stocks, there are some stocks that seem to be lagging behind. In the second part of the roundtable discussion, in which volunteer journalists covering Japanese stocks discussed market views and promising stocks, they discussed future risk factors and individual stocks to watch. (Click here for the first part)
●The key is still the “United States”
──Opinions are now largely divided regarding the level of the Nikkei Average in five years’ time, but I would like each of you to point out the risk factors that might cause sudden changes in the market.
Cap: On the economic side, there is a risk of the US CRE (commercial real estate) bubble bursting. If U.S. regional banks default one following another, the stock market will be affected more than expected, and I think it will continue to linger. Although the default rate is currently low, it is reported that the number of cases with under-collateralization, mainly in offices, is rapidly increasing. It is also important to note that Europe is more vulnerable to such negative factors than the United States, as was the case during the Lehman Shock.
Reporter A: There are many risks to the market, including the collapse of the generated AI bubble, Russia’s victory in the Ukraine war, and escalating tensions between China and Taiwan. However, even if there is a temporary sharp drop in stock prices, Japanese stocks do not seem overvalued and we believe that the market will recover soon. For the Japanese stock market, a sharp return to the yen’s appreciation would likely be a turbulent factor, but for now the yen is on a strong trend of depreciation, and even if the yen appreciates, I think it will be around 130 yen to the dollar. . If the yen becomes seriously appreciative, I think this will be a critical moment to determine whether or not the buying of Japanese stocks will continue.
Reporter C: From a medium-term perspective, I may be exaggerating, but I would like to point out the “risk of civil war” in the United States. American political scientist Barbara Walter’s book has attracted attention, but now, three years following the siege of the U.S. Capitol, the division between conservatives and liberals is even deeper than it was then. This is a country with people who are skilled at demagoguery, such as not only Mr. Trump but also Mr. Elon Musk, so if dissatisfaction with life increases due to inflation, some groups may take extreme action. The decline in US national power is itself a negative factor for the market, but it also has the side effect of increasing geopolitical risks in East Asia, which is likely to lead to an outflow of funds from Japanese stocks.
Reporter B: What is important is the future of the US economy. If we weigh the expectations for interest rate cuts once morest the risk of stagflation, we can say that we are in a situation where it is difficult to be unilaterally optimistic.
Cap: I also want to keep in mind the risk of Russia using nuclear weapons. If tactical nuclear weapons were actually used, it would shake up not only Ukraine but the world. Some believe that the trend of the stock market will not change due to geopolitical risks, but if the use of nuclear weapons were to become a reality, the perspective would change to the perspective of a crisis for humanity as a whole, so the rule of thumb would no longer apply.
──There is a saying in the market that “the higher the mountain, the deeper the valley”. By the way, I wonder if there are any differences or similarities between the bubble economy of the 1980s and now, and it seems that Mr. A and Mr. B were already working adults.
Reporter A: I was a young reporter, but during the bubble period there was a lot of suspicious stuff going on. I think the current Tokyo market has become smarter than in the past.
Reporter B: At the time of the bubble, people were very excited. Even in Kabutocho, I saw people walking around with envelopes bulging with wads of bills in their second bags, which was in bad taste, but that doesn’t happen anymore. After 30 lost years, our unusually optimistic view of the future has died down.
Reporter A: It’s sad that the market has lost its dynamism, but looking at individual investors, short-term buying and selling remains the norm, and long-term investing may still be the same.
●Notable stocks listed by a reporter in charge of Japanese stocks
──Finally, please tell us regarding the conditions for stocks that will become stars in the stock market going forward following the Nikkei Stock Average reaches an all-time high, and what individual stocks you are paying attention to.
Reporter A: I think that the condition for stocks that will play an active role in the future will be whether they can handle inflation. We are focusing on “banks” and “real estate” as sectors that are active in an era of inflation. Banks, in particular, are a sector where performance can be expected to grow due to increased interest rates under inflation.Sumitomo Mitsui Financial Group <8316> [東証Ｐ]has a dividend yield in the 3% range, making it suitable for long-term investment. Furthermore, as real assets are revalued, real estate can also be a powerful inflation hedge. For the time being, there are cautionary factors such as the size of interest-bearing debt, but we assume that asset values will gradually appreciate.Mitsui Fudosan, the largest company <8801> [東証Ｐ]I feel that Heiwa Real Estate is an attractive investment, but as someone who has feelings for Kabutocho, <8803> [東証Ｐ]I wish you all the best.
Reporter B: TOWA <6315> [東証Ｐ]In its third quarter financial results report, it is stated that “Investment to increase production of HBM for generative AI in South Korea was steady”, and we are paying attention to the HBM (broadband memory) related business.Also, although the reason may not be interesting, Nitori Holdings <9843> [東証Ｐ]I will list. This cannot be ruled out as expectations for interest rate cuts in the US are increasing and the yen is expected to appreciate further as the Japan-US interest rate differential narrows.Another thing to mention is Sanrio. <8136> [東証Ｐ]is. This year marks Hello Kitty’s 50th anniversary, and we can expect a boost in revenue from commemorative goods and content.
Reporter C: This overlaps with Mr. B, but globally, more and more companies are growing based on intangible assets such as brands and intellectual property (IP), and in Japan as well, we are seeing a rise in content such as character business, anime, and games. The presence of companies that are making great strides around the world is increasing.Anime production IG port <3791> [東証Ｓ]has significantly raised its stock price, but this year, “Kimi ni Todoke” is on Netflix.
Cap: The stocks that will dominate are basically influenced by the market trends and themes at the time, and currently stocks related to semiconductors and AI have been given pole positions. It can be said that this is a sector that attracts a lot of attention in the “Investment Theme Gacha”. Looking back at the past, there was a time when this was electric vehicles (EVs), next-generation batteries, renewable energy, and the stage continues to turn, but this time the theme of the set of semiconductors and AI is It seems to be quite strong and will last a long time.
Stocks to watch include Socionext with a medium-term stance <6526> [東証Ｐ]We believe that the growth capacity is large. In the history of improving the performance of semiconductors, new technologies have almost always appeared, but now instead of building semiconductor integrated circuits by stacking various performance elements on one chip, we are now using individual chips manufactured with each performance element. “Chiplet integration,” which involves combining several chips like blocks to complete a single semiconductor chip, is attracting attention as a new technological field. Socionext, which is Hinomaru Semiconductor’s leading company in semiconductor design and development, is attracting a lot of attention as a key company in this field, and Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) has already been involved in the design and development of 2-nanometer products.
Comture is another promising AI-related stock. <3844> [東証Ｐ]We are paying attention to. Although it is at the bottom on the monthly chart, the actual situation is extremely favorable, and the stock price is likely to be reviewed in the medium to long term. As an independent system integrator, the company supports companies’ digital transformation (DX) shifts through cloud services, but it is also a pioneer in AI development and human resource development, and we think it is highly likely that it will reach a point in terms of profitability in the future. . In terms of business performance, the company’s top line and profits have been in line for a long time, maintaining a high growth trend, which gives us confidence in its business model.
—Thank you, everyone, for today.
【profile】
▽Cap: After working as a reporter for a stock specialty paper, he served as editor-in-chief of Money magazine for over ten years. Although he has experienced the collapse of the bubble economy, the bursting of the IT bubble, the Lehman shock, and the deflationary spiral, he is fascinated by the dynamism of individual stocks and always takes a positive approach when discovering stocks.
▽Reporter A: Joined a trade newspaper at the beginning of the bubble economy. Find out when the highest price was in 1989. Even following the bubble burst, he continued to build his career as a securities reporter, covering the stock market.
▽Reporter B: A member of the bubble experience generation who joined a securities specialty newspaper in 1989. He also has extensive experience outside of the securities industry. He says that his strength lies in mid-sized and small-sized stocks and IPO stocks rather than large-sized stocks.
▽Reporter C: Covers the auto parts industry for a trade paper. He currently works for a news agency, reporting on stock and bond market prices. The only reporter on the team from the Super Ice Age generation.
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