Monex Global Retail Investor Survey Report

December 2018

Summary

1. Global Survey Results: Survey of Retail Investors in Japan, U.S. and China (H.K.)
   
   
   (1-1) The forecast DI (*) for world stock markets fell in Japan and the U.S. but returned to positive territory in China (Hong Kong).
   
   We asked retail investors in each region about their views on world stock markets for the coming three months. Among retail investors in Japan and the U.S., the DI fell from the previous survey (conducted between May and June 2018). Among retail investors in China (Hong Kong), however, the DI improved 9 percentage points, returning to positive territory. The recent global stock market correction appears to have worsened sentiment among retail investors in Japan and the U.S. but the improvement in the DI among retail investors in China (Hong Kong) was a slightly unexpected result.
   
   

   [The forecast DI for world stock markets]

   [Japan]	June 2018: 22 → Dec. 2018: 4 (-18 points)
   [U.S.]	June 2018: 18 → Dec. 2018: 10 (-8 points)
   [China (H.K.)]	June 2018: -2 → Dec. 2018: 7 (+9 points)

   
   
   
   * DI (diffusion index): The percentage of respondents who answered "will rise or improve" minus the percentage of respondents who answered "will fall or deteriorate."
   
   
   (1-2) Expectations for U.S. stocks were highest among retail investors in all three regions.
   
   Retail investors in all three regions answered that U.S. was the region where there is the greatest likelihood of stock price appreciation in the coming three months. It still appears to be the case that expectations of U.S. stocks are relatively high because of the current buoyancy of the U.S. economy.
   
   

   [Expectations for stock markets in the coming three months]

   [Japan]	U.S.: 40.6%	Europe/U.K.: 7.6%	Asia excl. Japan: 19.5%	Japan: 32.3%
   [U.S.]	U.S.: 74.5%	Europe/U.K.: 3.0%	Asia excl. Japan: 18.6%	Japan: 3.9%
   [China (H.K.)]	U.S.: 43.7%	Europe/U.K.: 7.5%	Asia excl. Japan: 42.1%	Japan: 6.7%

   
   
   
   
   
   
   
   
   
   
   (1-3) Among retail investors in the U.S. and China, the percentage expecting a stronger U.S. dollar was highest.
   
   In both the U.S. and China (Hong Kong), the currency that retail investors consider most likely to increase in value in the coming three months is U.S. dollar. However, the percentage of retail investors in China (Hong Kong) who so answered fell slightly from the previous survey. There was no major change in the USD/JPY forecast for the coming three months among Japanese retail investors compared to the previous survey (conducted in September 2018).
   
   
   
   
   * Figure 3-1 shows a comparison with the previous survey (between May and June 2018) for retail investors in the U.S. and China (Hong Kong). Figure 3-2 shows changes in USD/JPY forecast among Japanese retail investors from December 2014 to the present. Japanese retail investors were surveyed every month from the start of the survey to April 2016, every two months from June 2016 to December 2016, and every quarter from March 2017 to the present.
   
   
   
   (1-4) On the list of most attractive sectors, "Technology" fell from the top in all three regions.
   
   On the list of the most attractive sectors, "Medical" ranked tops among retail investors in Japan while "Healthcare" ranked tops among retail investors in the U.S. and China (Hong Kong). "Technology" had been on the top of the list of the most attractive sectors among retail investors in all three regions since June 2017, but there appears to have been a change in the preferences of retail investors following the sharp drop in FANG stocks recently, among other factors.
   
   
   
   
   
   * Figure 4-1 shows changes in the ranking among Japanese retail investors from March 2014 to the present. Japanese retail investors were surveyed every month from the start of the survey to April 2016, every two months from June 2016 to December 2016, and every quarter from March 2017 to the present. Figure 4-2shows a comparison of rankings with the previous survey (conducted between May and June 2018) for retail investors in the U.S. and China (Hong Kong).
   
   
   
   (1-5) The Crude Oil DI and the Metals DI fell in all three regions.
   
   The Crude Oil DI and the Metals DI fell among retail investors in all three regions. The recent sharp drop in crude oil futures prices appears to have had a strong impact.
   
   

   [Expectations for Crude Oil]

   [Japan]	June 2018：-5 → Dec. 2018：-21 (-16 points)
   [U.S.]	June 2018：52 → Dec. 2018：12 (-40 points)
   [China (Hong Kong)]	June 2018：31 → Dec. 2018：28 (-3 points)

   
   

   [Metals]

   [Japan]	June 2018：21 → Dec. 2018：16 (-5 points)
   [U.S.]	June 2018：34 → Dec. 2018：12 (-22 points)
   [China (Hong Kong)]	June 2018：24 → Dec. 2018：20 (-4 points)

   
   
   
   
   
   
   (1-6) In contrast to the market view, the percentage of retail investors in Japan forecasting a further rate hike in the U.S. in December was low.
   
   The percentage of retail investors in Japan who answered that the timing of the FRB's next rate hike would be March 2019 was the highest, which was in contrast to the market view that a December rate hike is almost certain. Meanwhile, 50% of retail investors in the U.S. and around 40% of retail investors in China (Hong Kong) forecast a further rate hike in December 2018.
   
   
   
   
   (1-7) The percentage of retail investors in Japan investing in cryptocurrency reached its highest level.
   
   We asked retail investors about much-talked-about "cryptocurrency" such as Bitcoins, with respect to their experience with and willingness to invest in. The percentage of retail investors in Japan answering that they had already invested in cryptocurrency was 11.5%, the highest level since this question was introduced. However, the percentage of retail investors in the U.S. and China (Hong Kong) answering that they had already invested in cryptocurrency fell from the previous survey. The recent fall in the value of cyptocurrency may have had a negative impact on investment in cryptocurrency.
   
   
   
Results


2. Japan Specific Quarterly Survey Results: Survey of Retail investors in Japan
   
   
   (2-1) Although the DIs for Japanese stocks and Chinese stocks rose, the DI for U.S. stocks fell sharply.
   
   We asked Japanese retail investors about their outlook for stock markets in Japan, the U.S. and China in the coming three months. The DIs for Japanese stocks and Chinese stocks both rose from the previous survey (conducted in September 2018), but the DI for Chinese stocks is still deep in negative territory. Meanwhile, the DI for U.S. stocks plunged 18 percentage points from the previous survey. While appetite to invest in Japanese stocks – which, based on the stock index, seem relatively cheap – is increasing, there appears to be a reluctance to invest in U.S. and Chinese stocks due to trade tensions between the two countries.
   
   

   [Japanese Stocks DI]	Sep. 2018: 6 → Dec. 2018: 11 (+5 points)
   [U.S. Stocks DI]	Sep. 2018: 38 → Dec. 2018: 20 (-18 points)
   [China stocks DI]	Sep. 2018: -33 → Dec. 2018: -32 (+1 points)

   
   
   
   
   
   
   (2-2) DIs for "trading frequency," "investment amount" and "number of stocks held" for Japanese stocks were mixed.
   
   Although the DIs for "trading frequency" and "investment amount" for Japanese stocks fell from the previous survey, the DI for "number of stocks held" remained flat. A wait-and-see attitude about Japanese stocks seems to be taking hold.
   
   

   [DI of trading frequency]	Sep. 2018: 25 → Dec. 2018: 20 (-5 points)
   [DI of investment amount]	Sep. 2018: 18 → Dec. 2018: 15 (-3 points)
   [DI of the number of stocks held]	Sep. 2018: 7 → Dec. 2018: 7 (0 points)

   
   
   
   
   
   
   (2-3) The Chinese economy is receiving greater attention.
   
   The topic that received the greatest attention among Japanese retail investors was "corporate earnings" in Japan. However, the percentage fell slightly from the previous survey. The topic that showed the biggest increase in attention compared with the previous survey was "Macroeconomics" of China (including Hong Kong). Interest in the Chinese economy is increasing due to the trade tensions between the U.S. and China.
   
   
   
   
   
   
   (2-4) Almost half of Japanese retail investors surveyed oppose the consumption tax hike planned in October 2019.
   
   We asked Japanese retail investors about the consumption tax hike planned in October 2019. When asked if they were for or against the consumption tax hike, almost half answered that they were against, while around 30% answered that they were for. Besides unease that the consumption tax hike will squeeze household budgets, many retail investors may be concerned that the consumption tax rate hike will lead to a recession in Japan, partly because there was a slump in consumption when the tax rate was raised from 5% to 8%.
   
   
   
   
   (2-5) Regarding the use of bonuses, "deposits/savings"and"asset management" ranked highest.
   
   We asked Japanese retail investors how they would use their bonus this winter. The most common answer was "saving deposit," closely followed by "asset management/investment". The number of retail investors has increased who intend to apply their bonus to a saving deposit or asset management/investment rather than spending it. We asked the Japanese retail investors who answered that they would use their bonus for "asset management/investment" about the financial instruments they would like to invest in, and an overwhelming majority answered Japanese stocks.
   
   
   
   
   
   
   (2-6) The highest percentage of investors, about 44%, forecast the 2019 high for the Nikkei average to be about 24,000 to 26,000 yen.
   
   We asked Japanese retail investors about their forecast of 2019 highs and lows of the Nikkei Stock Average and the Dow Jones Industrial Average. The percentage forecasting that the 2019 high of the Nikkei Stock Average would be 24,000 yen - 26,000 yen was highest, at around 44%. The percentage forecasting a 2019 low of 19,000 yen - 21,000 yen was highest, again at around 44%. The percentage forecasting that the 2019 high of the Dow Jones Industrial Average would be 26,000 $- 28,000 $ was highest, at around 32%, while the percentage forecasting a 2019 low of 22,000 $ - 24,000 $ was highest, at round 31%. Partly due to the unfavorable market environment of late, retail investors in Japan were not very bullish in their forecasts.
   
   
   
   
   
   
   
   
   
   

Japan

United States

Hong Kong

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