The 2024 Nikkei Average is expected to be the highest in history! Introducing a list of analysts' predictions and recommended sectors

Expectations are growing that the 2024 Nikkei Stock Average will hit a record high (38,915 yen) in 1989/12. The year 23 hit a high for the first time in 33 years, and many securities company strategists and analysts expect that Japanese stocks, which had the highest performance in Asia, will continue to perform well for 24 years.

When compared according to the Chinese zodiac, 24 is the year of the dragon where stock prices have risen the most since 1950, and attention is being paid to whether it will be the “Tatsumi ceiling” as the saying goes. Forecasts by securities company strategists and analysts, as reported in the Nihon Keizai Shimbun and Bloomberg, have been compiled.

What sectors do analysts recommend?

The following recommended sectors have been cited by securities company analysts who anticipate a rise in Japanese stocks in '24.

▲Japanese stock sector recommended by analysts in 2024 (Bloomberg)

Will inflation with rising wages continue in the domestic economy?

Nomura Securities Chief Equity Strategist Ikeda Yunosuke and his colleagues said”Expectations for overcoming deflation again during the Spring Battle have increased, and the rise seems to intensify in the first half of 24 with fixed tax cuts of 5 trillion yen and a fixed consumption boost due to benefits scheduled to be implemented by the government in June” is predicted (Bloomberg, 11/20). Mr. Ryota Sakagami, a stock strategist at Citigroup SecuritiesEffects of a recovery in domestic demand and boosting nominal earnings due to inflationIn response, etc., it is believed that “it is possible to update the highest value in history” (Bloomberg dated 12/14).

Support for the US economy and shift away from Chinese stocks

External factors such as economic support assuming a soft landing of the United States and the shift in Japanese stocks from Chinese stocks, where the economy continues to slow down, are also expected to be tailwinds. Daiwa Securities Japan-US stock chief strategist Tsuboi Hirotaka is one of the good things about Japanese stocks,”The appreciation of US stocks in response to the start of a reduction in US interest rates” is listed (Nihon Keizai Shimbun dated 12/15).

Meanwhile, JPMorgan Securities quants strategist Takada Masanari and his colleagues said, “This year's due to fund shifts in global investorsOutperformance of Japanese stocks against Chinese stocksIt is a “long-lasting” change, and there is a high possibility that it will continue until '24” (Bloomberg, 11/15).

The company's efforts to improve capital efficiency were evaluated

It is also expected that listed companies will improve capital efficiency and lead to an increase in stock prices due to requests from the Tokyo Stock Exchange and the spread of activities of activists (speaking shareholders), etc.

Mitsubishi UFJ Morgan Stanley Securities strategist Nakazawa Sho and his colleagues, who anticipate reaching 39,000 yen at the end of '24, are in addition to “corporate price transfer due to a virtuous cycle of wages and prices.”An increase in MBOs and TOBs, acceleration of business restructuring, etc. will form an upward trend in Japanese stocks” is being analyzed (Nihon Keizai Shimbun dated 12/15). Also, Mr. Tsutomu Saito, a multi-asset strategist at Societe General SecuritiesAs share buybacks increase, purchases by overseas investors focusing on performance improvements will become active again” and (Bloomberg, December 14).

Entry of domestic individual investors due to the introduction of the new NISA

Not only overseas investors, but also the entry of domestic individual investors associated with the introduction of the new NISA in January is expected to boost stock prices. Mr. Saito and his colleagues at Societe Generale Securities said, “There have been changes in the behavior of individual investors, such as increasing Japanese stock purchases through public offerings and sales (PO),There is a possibility that the expansion of purchases will continue in the form of support from the new NISA” and (Bloomberg, December 14).

Goldman Sachs Group strategists Bruce Kirk and Tatebe Kazunori said,”If the introduction of the new NISA succeeds, there is a possibility that attention to small to medium growth stocks will increase against the backdrop of increased individual participation, etc.” (Bloomberg, 11/20).

Risk factors are “political turmoil,” “Bank of Japan policy,” and “yen appreciation.”

There are also risk factors for Japanese stocks in '24. What concerns me the most is the political issue. In the United States, the presidential election where former President Trump aims to return is ahead in November, and Prime Minister Kishida's term of office as Liberal Democratic Party president, whose support office is declining in Japan, expires at the end of September. Mr. Goken Suezawa, a financial analyst at SMBC Nikko Securities, said, “The year of the dragon is also called the year of political upheavals,I want to keep in mind the possibility of political turmoil in both Japan and the US” is pointed out (Nihon Keizai Shimbun dated 12/22). Mr. Nishihara Rie, chief Japanese stock strategist at JP Morgan Securities, also said, “There is also a risk that a drastic decline in the approval ratio (of the Kishida Cabinet) will lead to a movement to search for a new system,”There is a possibility that the unstable political situation is putting downward pressure on Japanese stocks” (Bloomberg, December 20).

Also, observations on interest rate hikes by the Bank of Japan and excessive appreciation of yen are also risk factors. Mr. Ikeda of Nomura Securities said,”In the latter half of '24, the appreciation of Japanese stocks will become heavy due to the Bank of Japan's policy normalization and the strengthening of the yen” and (Bloomberg, December 14). Also, Mr. Tsuboi of Daiwa Securities said,”It is assumed that 1 dollar = 135 yen in '24, but if the appreciation of the yen progresses more than expected, corporate profits will be pushed down, and there is a risk that EPS will decline” (Nihon Keizai Shimbun dated 12/15).

ー MooMoo News Mark
Source: Nihon Keizai Shimbun, Bloomberg

181K Views