Nomura Individual Investor Survey
October 2009

2 October 2009

Investment Strategy Department
Financial & Economic Research Center
Nomura Securities Co., Ltd.
News Release

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1. Survey overview
(1) Nomura I-View Index declines 6.8 points m-m to 40.8 The Nomura Individual Investor Market View Index (Nomura I-View Index), based on respondents’ three-month outlook on share prices, was 40.8 for October, a decrease of 6.8 points from a month earlier. The Nikkei Average reference level for this month’s survey (18 September close) was 10,370, up 132 from the level last month. It appears, however, that individual investors are becoming less optimistic on the outlook for share prices. The total proportion of respondents expecting the Nikkei Average to rise over the next three months was 70.4%. The proportions of investors expecting a “rise of about 3,000 points” and a “rise of about 2,000 points” both declined compared with the September survey, and the proportion of responses for a “rise of about 1,000 points”, a “fall of about 1,000 points”, a “fall of about 2,000 points”, and a “fall of about 3,000 points” all rose m-m. (2) Polarization evident in planned trading activity For planned trading activity over the next three months, the proportion of “plan to increase” responses rose m-m for number of different stocks traded, investment amount, and frequency of trading activity, and the proportion of “plan to decrease” responses rose for all four categories (number of different stocks traded, investment amount, frequency of trading activity, and number of stocks held). Individual investors thus appear to be split on future trading plans. (3) DIs for domestic politics and overseas political & economic situation rise for the third straight month Respondents were asked to rate the impact of a set of factors on the stock market in the next three months. The diffusion index, calculated as the proportion of “positive” and “somewhat positive” responses minus the proportion of “negative” and “somewhat negative” responses rose m-m for three categories: domestic politics, overseas securities markets, and overseas political & economic situation. The DIs for domestic politics and overseas political & economic situation rose for the third straight month. (4) Appeal of the financials sector hits record low Respondents were asked to choose one sector as an “appealing” investment target and one as “unappealing.” We calculated a diffusion index for each sector by subtracting the percentage of responses for “unappealing” from that for “appealing.” The DI for the financials sector was –20.6, down 11.1 points on the September reading to its lowest level since the survey began in April 2006. Pharmaceuticals & healthcare was the most appealing sector for the sixteenth consecutive month, while construction & real estate was the least appealing for the seventh straight month.

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2. Survey results

(1) Nomura I-View Index declines 6.8 points to 40.8 The Nomura Individual Investor Market View Index (Nomura I-View Index), based on respondents’ three-month outlook on share prices, was 40.8 for October, a decrease of 6.8 points from a month earlier. The Nikkei Average reference level for this month’s survey (18 September close) was 10,370, up 132 from the level last month. It appears, however, that individual investors are becoming less optimistic on the outlook for share prices (Exhibit 1).

1. The Nomura I-View Index and reference level of Nikkei Average at time of survey

0
10
20
30
40
50
60
70
80
06/4 06/7 06/10 07/1 07/4 07/7 07/10 08/1 08/4 08/7 08/10 09/1 09/4 09/7 09/10 10/1
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
(¥)
Nikkei Average at time of survey (rhs)
Nomura I-View Index (lhs)
Note: The Nomura I-View Index is based on data collected by this survey and expressed as a diffusion index. The calculation method is as follows:

[(Number of responses indicating expected rise in share prices in the next three months) minus (number of responses indicating expected fall in share prices in the next three months) divided by number of respondents] X 100

The Nomura I-View Index ranges from –100 to +100. The closer to +100 the figure is, the more bullish the outlook held by individual investors. The closer to –100 the figure is, the more bearish the outlook held by individual investors.

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The total proportion of respondents expecting the Nikkei Average to rise over the next three months was 70.4%.
The proportions of investors expecting a “rise of about 3,000 points” and a “rise of about 2,000 points” both declined compared with the September survey, and the proportion of responses for a “rise of about 1,000 points”, a “fall of about 1,000 points”, a “fall of about 2,000 points”, and a “fall of about 3,000 points” all rose m-m. The proportion expecting a “fall of about 1,000 points” rose 3.1ppt m-m to 24.9%, its highest level in four months (Exhibit 2).

2. Outlook for Nikkei Average during the next three months

(% of responses)
0
5
10
15
20
25
30
35
40
45
50
Fall of more than 3,000 points
Fall of about 3,000 points
Fall of about 2,000 points
Fall of about 1,000 points
Rise of about 1,000 points
Rise of about 2,000 points
Rise of about 3,000 points
Rise of more than 3,000 points
Sep
Oct

Note: Respondents were asked to share their outlook for the Nikkei Average during the next three months based on an 18 September closing figure of 10,370. Respondents could choose one answer from a possible eight responses ranging from a rise of more than 3,000 points to a fall of more than 3,000 points with 1,000-point increments in between.

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(2) Polarization evident in planned trading activity We asked investors about trading activity over the past three months. The proportion of “increased” responses fell m-m in all four categories: number of different stocks traded, investment amount, frequency of trading activity, and number of stocks held. The proportion of “decreased” responses fell in three categories: number of different stocks traded, frequency of trading activity, and number of stocks held. The proportion of “no change” responses reached its highest level since the survey began in April 2006 for all four categories.
For planned trading activity over the next three months, the proportion of “plan to increase” responses rose m-m for number of different stocks traded, investment amount, and frequency of trading activity, while the proportion of “plan to decrease” responses rose in all four categories. Individual investors thus appear to be split on future trading plans (Exhibit 3).

3. Number of different stocks traded, investment amount, frequency of trading activity, and number of stocks held
(%)
Increased
No change
Decreased
(1) Past three months
Oct
Sep
Oct
Sep
Oct
Sep
No. of different stocks traded
10.3
11.9
77.3
75.1
12.4
13.0
Investment amount
10.4
11.2
75.6
75.1
14.0
13.7
Frequency of trading activity
10.6
10.7
72.4
71.6
17.0
17.7
No. of stocks held
8.6
10.0
79.8
76.4
11.6
13.6
Plan to increase
No change
Plan to decrease
(2) Next three months
Oct
Sep
Oct
Sep
Oct
Sep
No. of different stocks traded
23.2
22.1
67.4
69.7
9.4
8.2
Investment amount
22.6
20.4
66.8
71.6
10.6
8.0
Frequency of trading activity
27.0
24.5
65.2
68.0
7.8
7.5
No. of stocks held
19.4
19.7
66.6
68.9
14.0
11.4
Note: Respondents were asked about the number of different stocks traded, the investment amount, the frequency of trading activity, and the number of stocks held for the past three months and desired levels in these categories for three months hence. The possible responses were increased (plan to increase), no change, or decreased (plan to decrease).
(3) DIs for domestic politics and overseas political & economic situation rise for the third straight month Respondents were asked to rate the impact of a set of factors on the stock market in the next three months as “positive,” negative” or “neutral.” The diffusion index, calculated as the proportion of “positive” and “somewhat positive” responses minus the proportion of “negative” and “somewhat negative” responses, improved m-m for three categories: domestic politics, overseas securities markets, and overseas political & economic situation. However, the DI fell for domestic economy & corporate earnings, market factors & psychological factors, and domestic interest rates & forex trends. The DIs for domestic politics and overseas political & economic situation rose for the third straight month, while the DI for domestic interest rates & forex trends fell m-m for the third straight month (Exhibit 4).

4. Impact of factors on the stock market
(%)

DI
Positive
Somewhat positive
Neutral
Somewhat
negative
Negative

Oct
Sep
Oct
Sep
Oct
Sep
Oct
Sep
Oct
Sep
Oct
Sep
Domestic economy & corporate earnings
8.8
16.0
3.7
4.6
31.8
36.2
37.8
34.4
22.3
21.0
4.4
3.8
Market factors & psychological factors
7.3
10.6
2.5
3.5
32.4
32.7
37.5
38.2
22.8
21.7
4.8
3.9
Domestic interest rates & forex trends
-22.3
-12.5
1.3
1.2
12.9
14.1
49.3
56.9
30.1
24.7
6.4
3.1
Domestic politics
12.1
-8.5
3.9
2.8
32.0
25.4
40.3
35.1
17.9
29.5
5.9
7.2
Overseas securities markets
18.1
8.8
3.2
2.1
32.0
29.9
47.7
44.8
15.4
20.6
1.7
2.6
Overseas political & economic situation
11.5
5.7
1.7
1.6
27.3
25.4
53.5
51.7
16.0
18.7
1.5
2.6
Note: The DI is the proportion of “positive” and “somewhat positive” responses minus the proportion of “negative” and “somewhat negative” responses.