2023-06-22 04:19:53
We have entered a period in which selling pressure to curb the upper price of Japanese stocks is likely to increase. Exchange-traded funds (ETFs) and pension funds will generate selling demand, and there is a risk that the rising pace of the rising market will temporarily slow down.
In June, when Japanese stocks hit a 33-year high in a row, many pension funds cut their weight on stocks, which had been swollen due to the rise in the market. ETF management companies whose settlement of accounts will end in July will need to sell their shares for the purpose of cashing out in order to use them for distributions.
Ryohei Yoshida of Daiwa Securities pointed out the risk of an early collapse in the supply and demand of stocks, saying, “It wouldn’t be strange if there were moves to anticipate June 30.” In addition to the selling of ETFs and the large-scale rebalancing of pensions that will continue at the end of May, I think the timing will also coincide with the end of the shareholders’ meetings of many listed companies and the reinvestment of dividends.
According to the same securities, the settlement dates of major passive ETFs are concentrated in early July, and it is estimated that the positions of ETFs with settlement dates on the 7th and 10th will be closed in order to pay distributions, totaling 1 trillion. It is expected to reach a record high of over 100 billion yen.
The stock market continued to rise rapidly in June, and annuity sales are expected at the end of the month. The share of domestic stocks held by the Government Pension Investment Fund (GPIF) has risen from 25.1% at the end of the year to 27.4%, the securities company estimates. In order to reduce the proportion of domestic stocks to 25% of the total portfolio, it is necessary to sell regarding 5.2 trillion yen.
TOPIX tends to have a heavy topside from late June
On the other hand, some say that the decline in stock prices due to selling pressure is temporary. Hiroshi Matsumoto, Senior Fellow at Pictet Japan’s investment and product division, said that ETF distributions “are an annual event, so we don’t see them as a factor in disrupting the market.” Since the dividends are used for reinvestment, we are watching where the dividends go.
Yutaka Miura, a senior technical analyst at Mizuho Securities’ equity research department, said the slackness in the supply and demand of stocks would be limited to holding down the topside of the market. He said that the good news that pushed the stock index to the high price range has been exhausted, and the interlocking movement of US stocks is increasing.
Looking at the stock indices of the seven major countries (G7), Japan’s monthly increase rate in May was the highest. In the background, there was an inflow of funds, mainly from overseas investors, who were attracted by the Tokyo Stock Exchange’s request to improve the price book value ratio (PBR) and the expectation of corporate wage increases. Fundamentals such as low interest rates are solid, and if the slack in supply and demand since the end of June is digested in the market, it can be expected that Japanese stocks will continue to rise.
Yoshiki Nagata, Senior Portfolio Manager at Meiji Yasuda Asset Management Co., Ltd., said while keeping in mind the rebalancing of pensions and the selling of ETFs, “There is a high possibility that the market will adjust until around the beginning of July. However, that will be a good time to buy. I wonder if it will be,” he said.
(Adds comments from market players in seventh paragraph)
1687411203
#Japanese #stocks #annual #supply #demand #deterioration #selling #trillion #yen #ETFspension #redistributionBloomberg
