Market Review for June 2020 2nd July 2020

The Japanese equity market for June was mixed since concerns over a prolonged COVID-19 pandemic weighed on the market. TOPIX ended down 0.31% whilst Nikkei 225 ended up 1.88% on the previous month- end. In the first half of the month, the market rose on expectations for the resumption of economic activities. However, the market declined from the middle of the month as the number of COVID-19 cases increased outside of .

Table 1. Market Performance

2020 As of the end of June June Year to Date TOPIX 1,558.77 -0.31%* -9.45%* Nikkei 225 22,288.14 1.88% -5.78% USD/JPY** 107.89 107.74 (29 May) 108.68 (end of 2019)

*MTD: -0.19%, YTD: -8.17% in total return index, **Reuters London 4pm

Figure 1. TOPIX and USD/JPY in 2020 Figure 2. Global Equity Market Monthly Performance 1,800 120 (as of the end of June 2020, local currency) TOPIX 15.0% 1,700 115 USD/JPY (RHS) 10.0% 7.9% 1,600 110 6.4% 6.2% 5.0% 4.6% 3.0% 1.9% 1.8% 1.7% 1.5% 1,500 105 0.0% -0.2% -0.3% 1,400 100 -5.0%

1,300 95

1,200 90 Jan Feb Mar Apr May Jun

Table 2. Top 5 performing sectors in June 2020 Table 3. Bottom 5 performing sectors in June 2020 Sector Return Sector Return

Information & Communication 4.18% Mining -10.52% Other Products 3.97% Land Transportation -7.66%

Electric Appliance 3.65% Air Transportation -6.80%

Machinery 2.89% Oil & Coal Products -6.59% Securities & Commodity Futures 1.76% Fishery, Agriculture & Forestry -4.90%

Table 4. Top 5 performing stocks* in June 2020 Table 5. Bottom 5 performing stocks* in June 2020

Name Return Sector Return Electron (8035 JP) 22.98% West Japan Railway (9021 JP) -13.02% ZOZO (3092 JP) 20.77% Daito Trust Construction (1878 JP) -12.96% Z Holdings (4689 JP) 19.55% (4568 JP) -12.68% Tokyo Century (8439 JP) 17.61% East Japan Railway (9020 JP) -11.55% Chemical (4021 JP) 16.09% Dentsu Group (4324 JP) -11.44%

*Stocks with a market cap of over JPY 500 billion Figure 3. Value-Growth Spread in 2020 Figure 4. Large-Small Cap Spread in 2020

(End of December 2019 = 0) (End of December 2019 = 0) 10% 10% Value Large -2.80% MTD, -16.34% YTD

0% 0%

Growth -10% Small-10% 1.45% MTD, 3.98% YTD

-20% -20% Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun

The spread between Russell Nomura Value Index and the The spread between Russell Nomura Large Cap Index and the Growth Index (Positive figure means value dominant) Small Cap Index (Positive figure means Large Cap dominant)

Figure 5. MSCI Japan Factor Indexes Spread against MSCI Japan in 2020 Quality Minimum Volatility High Dividends 15.0% (End of December 2019 = 0)

10.0%

5.0%

0.0%

-5.0%

-10.0% Jan Feb Mar Apr May Jun Data: Bloomberg, Nomura Securities, SuMi TRUST (as at the end of June 2020)

Figure 6. Monthly Investment Activities by Investor Type in the Japanese Equity Market (JPY billion) 4,000

Individuals 2,000 Overseas Investors 0 Pensions -2,000 Financial Insitutions -4,000 Others

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