Even as Warren Buffett’s blessing and buying by foreign investors helps drives outperformance in Japanese stocks this year, retail investors are turning increasingly bearish.
(Bloomberg) — Even as Warren Buffett’s blessing and buying by foreign investors helps drives outperformance in Japanese stocks this year, retail investors are turning increasingly bearish.
The blue-chip Nikkei 225 Stock Average has risen more than 9% so far to above 28,000, while the MSCI Asia Pacific Index Excluding Japan Index is up less than 1%. Gains have been helped in part by an influx of funds from overseas and a report that Buffett is looking to increase his exposure to the nation’s equities.
At the same time, local individuals appear to be heading for the exit. The number of shares in Nomura Asset’s Next Funds Nikkei 225 Leveraged Index ETF, which is popular among retail investors, has dropped to the lowest level since April 2021 amid rising withdrawals.
Individuals have ramped up bearish bets on Japanese stocks as well. Shares outstanding in the Next Funds Nikkei 225 Double Inverse ETF — which is designed to move in the opposite direction of the index and by double the amount — have risen to a new all-time high.
“Many individual investors see the Nikkei Stock Average in the upper 28,000-yen range as a high level,” said Tomoichiro Kubota, a market analyst at Matsui Securities Co. Given wariness over whether Japanese stocks can maintain their recent momentum, “many are looking to sell,” he added.
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