Tokyo Market Summary: Nikkei Average Continues to Grow, Bank of Japan “YCC Concerned About Future Side Effects” July Meeting Opinion

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●The Nikkei Average ended at 32254.56 yen, 61.81 yen higher than the previous business day
● Bank of Japan “YCC concerned about future side effects” July meeting agreement opinion
● Toshiba and the domestic coalition will keep TOB private for about 2 trillion yen from the 8th
● Toray - Backmarket gains expanded 1Q final profit fell 65%, surpassing market consensus
● Wall Street predicts the end of the earnings recession - profit is expected to continue to decline from April to June
● Attention to the handle: $Toray Industries(3402.JP)$、 $東芝(6502.JP)$、 $SoftBank(9434.JP)$、 $Astellas Pharma(4503.JP)$etc
ー MooMoo News Japanese stock Sherry

Market Overview
Today's Nikkei Stock Average ended at 32254.56 yen, 61.81 yen higher than the previous business day, and the Tokyo Stock Price Index (TOPIX) ended at 2283.93, 9.30 points higher than the previous business day.

Top news
Bank of Japan “YCC Concerned about Future Side Effects” July Meeting Opinion
On the 7th, the Bank of Japan announced “main opinions” summarizing the contents of the monetary policy meeting held from 7/27 to 28. Committee members said, “By operating long and short interest rate operations (yield curve control, YCC) more flexibly, we should 'prepare' to successfully continue mitigation.” Meanwhile, there were many voices concerned about future side effects of YCC. One member expressed the idea that “by strictly holding the upper limit of long-term interest rates at the level of 0.5%, there is a risk that the function of the bond market and volatility (fluctuation rate) in other financial markets will be affected.”

Nippon Life is the first domestic life insurance company to exclude oil and gas extraction from financing
Nippon Life Insurance excludes oil and gas extraction projects from investment and financing. An increasing number of financial institutions are withdrawing from investing in and financing coal mining, but this is the first domestic life insurance to include oil and gas. The aim is to encourage companies to accelerate decarbonization efforts, and there is a possibility that similar movements will spread to other financial institutions.

Manufacturing industry sluggish in 70% of major countries, demand shortage on par with “Lehman times”
Global demand for goods is falling. Looking at the business climate index for the manufacturing industry, corporate activity “shrank” in 70% of the 29 major countries/regions. We have not been able to use the elimination of supply restrictions as a tailwind due to lack of demand. The focus will be on whether the service industry can fully support the economy as a whole.

The business trend index rose 0.9 points in June
As for the June business trend index (2020 = 100) preliminary report value announced by the Cabinet Office on the 7th, the agreement index showing the current state of the economy rose 0.9 points from the previous month, and improved for 3 consecutive months. The keynote judgment was left unchanged at “showing improvements.”

Food self-sufficiency rate last year was 38% flat from the previous fiscal year but at a low level
The food self-sufficiency rate, which indicates how much food consumed domestically was covered by domestic production, was 38% on a calorie basis last year, flat from the previous fiscal year, and is still at a low level.

Wall Street predicts end of earnings recession - profit decline is expected to continue from April to June
As the financial results season for US companies is coming to an end, it is clear that it can be read from there. Although issues remain, there is a high possibility that profit pain has come out of the worst period for a wide range of companies as inflationary pressure that puts pressure on profit margins is being mitigated. The bad news is that at the stage where 80% or more of the stocks that make up the US S&P 500 stock price index have announced financial results, profit per share fell 7%, and profit is in the direction of declining for 3 consecutive quarters.

Emerging market investors shift from bonds to equities — prepare for when tightening ends
Investors investing in emerging markets are shifting from bonds to stocks in preparation for a world after financial tightening ends.

Investments flooded into LLM technology-related startups supporting generative AI
Along with the remarkable development of generative AI (artificial intelligence), investments are flooding in to startups that develop the “large-scale language model (LLM)” that is the basis for it. The total amount raised by each emerging LLM development company in 2023 reached a record high of 11.6 billion dollars (about 1.6 trillion yen), and competition among companies, starting with US Open AI, is only intensifying. Who holds the hegemony? CB Insights analyzed the current state of LLM companies and predicted future developments.

Notable stocks
Toray - Backmarket gains expanded 1Q final profit fell 65%, surpassing market consensus
$Toray Industries(3402.JP)$The range of improvements in the backfield has expanded. The company announced at 12:30 on the 7th that consolidated net profit (IFRS) for the 24.3 period 1Q (April-6) was 13.95 billion yen (down 65.1% from the same period last year). The market consensus is 11.67 billion yen. Also, the consolidated sales revenue forecast for the full fiscal year 24.3 was lowered from the previous 2.62 trillion yen to 2.56 trillion yen. Each profit forecast has remained unchanged. Note, since stock prices have surpassed market consensus, buying has become dominant.

Toshiba and the domestic coalition will keep TOB private for about 2 trillion yen from the 8th
$東芝(6502.JP)$It was announced on the 7th that the domestic union centered on the investment fund Japan Industrial Partners (JIP) will begin TOB (public tender offer) on the 8th. The TOB price is 4620 yen. It aims to acquire all shares, and once established, Toshiba will be delisted and the 74-year listing history will once come to an end.

SoftBank feels good about the year-to-date high operating profit increase in the April-June period
On the Tokyo Stock Exchange on the 7th $SoftBank(9434.JP)$It continues to grow. It temporarily rose to 1608 yen, 47 yen (3.0%) higher than the previous weekend, breaking the year-to-date high. In the consolidated financial results for the fiscal year ending 2023/4/6 announced on the 4th, operating profit was 246.3 billion yen, up 2% from the same period last year. Analysts predicted a 4% decrease in profit to 232.4 billion yen (QUICK consensus as of the 3rd, average of 8 companies), so purchases were favorable when landing due to an increase in profit.

Daiwa House - Rear Market Growth Expanded 1Q Operating Profit 56% Increased Actively Promoting Value-Added Proposals and Policies
$Daiwa House Industry(1925.JP)$The range of improvements in the backfield has expanded. The company announced at 14:00 on the 7th that consolidated operating profit for the 24.3 period 1Q (April-6) was 93.08 billion yen (up 55.9% from the same period last year). Actively promoting various high added value proposals and measures, such as expanding overseas business and stock business and improving customer experience value through DX, contributed. The market consensus is 70.2 billion yen.

Taisei Corporation - Rear Market Plunge 1Q Operating Deficit Falls Construction Business Losses Resonate
$Taisei(1801.JP)$It plummeted in the backfield. The company announced at 14:00 on the 7th that consolidated operating profit and loss for the 24.3 fiscal year 1Q (April-6) was in deficit of 8.04 billion yen (surplus of 6.08 billion yen in the same period last year). The effects of rising costs became apparent as construction material prices remained high across a wide range of items. Under this environment, the fact that losses were recorded in the construction business and that sales declined in the development business resonated.

Astellas suddenly rebounds for the first time in 4 days, and performance is expected to improve due to US FDA “Iservey” approval
$Astellas Pharma(4503.JP)$There was a sudden backlash for the first time in 4 days. On the 7th, it was announced that approval was obtained from the U.S. Food and Drug Administration (FDA) for “Iservey,” which is being developed as a treatment for age-related macular degeneration (AMD) accompanied by cartographic atrophy (GA), and it seems that it induced purchases expecting an increase in business performance.