Stock Market Rally Boosts Reassessment of Securities Sector and Luxury Goods Sales
The strong upward momentum in the Tokyo stock market is expected to have a positive impact on various sectors. Nikkei 225 has risen above￥30,000, reaching a 33-year high. This rise will likely benefit securities sector businesses, such as online securities firms and asset management companies. Additionally, the surge in stock prices is expected to generate asset effects, leading to a renewed interest in the real estate and department store sectors.
While there is caution regarding the high stock prices, many suggest that downside risks are limited.
Nikkei 225 experienced a slight decline on the 23rd, closing at 30,957, which was 129 yen lower compared to the previous day. However, the overall upward momentum remains strong, driven by buying from foreign investors. The primary reason behind this stock market rally appears to be the perception that Japanese stocks are undervalued. Despite concerns about high price levels, if the shift from deflation continues, the Tokyo stock market, which is considered undervalued, will likely experience limited declines and adjustments.
The upcoming introduction of the new Individual Savings Account (NISA) system in January 2024 is expected to provide further tailwinds to the stock market.
The new NISA will offer tax exemptions with no expiration date. It will include a “growth investment category” for stocks and investment trusts and a “monthly investment category” for systematic investment in investment trusts. Under the new system, the annual non-taxable investment limit will increase to 3.6 million yen.
The stock market rally is also anticipated to attract new funds into the securities industry, with a surge in the opening of new individual accounts, particularly at online securities firms. Major stocks that have seen increased holdings in the current general NISA system at SBI Securities include JT(2914), Mitsubishi UFJ Financial Group(8306), Takeda Pharmaceutical(4502), Mizuho Financial Group(8411), SoftBank(9434), and Toyota Motor Corporation(7203). It is predicted that these stocks will also attract new investments under the new NISA system.
The strong tailwinds in the securities business are benefiting major securities firms.
Major securities such as Nomura Holdings(8604), Daiwa Securities Group(8601), smaller securities firms like Tokai Tokyo Financial Holdings(8616) and Okasan Securities Group(8609), and online securities such as SBI Holdings(8473), Monex Group(8698), and Matsui Securities(8628) are getting focused. Large securities firms are more susceptible to uncertainties in overseas markets, and there is a growing trend of reevaluation focused on online securities firms that cater to individual investors. Many face-to-face securities firms, including major ones, have been experiencing a prolonged state of PBR (Price-to-Book Ratio) below 1, raising expectations for future measures to address stock prices.
Additionally, asset management companies like Rheos Capital Works(7330), WealthNavi(7342), and Sparks Group(8739) are likely to experience a reassessment. Infrastructure stocks supporting the securities market, such as Japan Securities Finance Co.(8511) and Japan Exchange Group(8697), are also expected to gain attention and attract buying interest.
Real estate, department stores, and fine restaurants under asset effect
The stock market rally to 30,000 is anticipated to bring about an “asset effect” for the Japanese economy. This refers to the activation of consumption and investment through the appreciation of financial assets such as stocks and real estate. Luxury apartment sales to wealthy individuals with significant holdings in stocks are expected to increase. Companies such as Mitsui Fudosan(8801), Mitsubishi Estate(8802), Sumitomo Realty(8830), Nomura Real Estate Holdings(3231), and Tokyu Fudosan Holdings(3289) may see a reevaluation.
Large department stores like Mitsukoshi Isetan Holdings(3099), Takashimaya(8233), and J. Front Retailing(3086) are likely to benefit from the growth in their foreign business segments, anticipating asset effects. High-end restaurants like Hiramatsu(2764), Western and Japanese cuisine restaurants such as Ukai(7621), membership-based resort operator Resort Trust(4681), and auction company Shinwa Wise Holdings(2437), which specializes in high-end artworks, ceramics, and other items, are also attracting attention.