Summit Notebook

Exclusive outtakes from industry leaders

Nikkei recessive exuberance


If the Nikkei’s spring rally from multi-decade lows whet appetites for a “Japan is back” soaring benchmark, it’s time to check that excessive exuberance, says Deutsche Securities’ Naoki Kamiyama, who sees a top of 10,500 yen for the Nikkei 225 and 1,000 for the Topix over the next year.

No one was expecting a return to 30,000 or even 20,000 for the Nikkei, which has found upside tough after a recent crack above the 10,000 line. But the veteran of many years of Japan asset-watching says market optimism is now meeting reality, with gains of less than 10 percent from current levels likely.

“Earnings are not on the rise, so the price-to-earnings ratio will remain high,” he told the Reuters Japan Investment Summit. “We’re at an important turning point where stocks have priced in a certain recovery, but the extent of that is not enough.”

After the worst year in Japanese trading history that drove the Nikkei down 42 percent amid a global financial crisis that left far greater carnage than just equity prices, a relatively moribund Nikkei seems a minor concern. But there are some buys out there, Kamiyama says.