Source: Wall Street See
Author: Zhang Yaqi.

Nomura believes that the strong performance of value stocks over the past four years is closely related to the monetary policy of the japan central bank. As long as the pace of interest rate hikes continues, value stocks will remain a focal point. In the first half of next year, export-oriented value stocks may see a rebound.

How long can value stocks in japan continue to thrive? Nomura believes that by the first half of 2025, value stocks in japan will continue to "flow towards value stocks."

On the 19th, Nomura Securities pointed out in its research reports that value stocks have continued to perform brightly over the past four years, and this trend is closely related to the monetary policy of the Bank of japan. As long as the pace of interest rate hikes continues, value stocks will still be a key focus for investors.

Looking ahead to 2025, Nomura believes that export-oriented value stocks will become the market focus in early next year.

Value stocks have performed brightly for four consecutive years.

Recent data shows that investing in value stocks in japan has been very profitable.

Nomura stated that since 2021, the value factor of the japanese stock market (based on the low p/b ratio, which is the inverse of B/P) has recorded double-digit positive returns for four consecutive years. By mid-November 2024, the return on the value factor reached as high as 12.1%, significantly above the average level since 1993.

However, it is worth noting that the value factor based on historical valuations (using the B/P benchmark from the past 36 months) has not performed well, showing negative returns for two consecutive years.

Nomura Securities' analysis suggests that although value stocks continue to be bought, the historical value factor based on the pb ratio has not been effective in recent years, as investors are more focused on the level of pb ratio, such as the market reforms of the Tokyo exchange.

The reforms of the Tokyo exchange have been one of the significant driving factors for japanese value stocks. Since the reform meeting at the end of 2022, low p/b ratio stocks have been favored by the market due to the high expectations for shareholder returns, especially for companies with a p/b ratio below 1.

However, Nomura Securities anticipates that this trend may weaken in the future, and investors need to pay attention to fundamental analysis rather than solely relying on valuation levels.

The Bank of Japan's policy remains crucial.

The research report emphasizes that while the global market environment and the economic trends in the usa have a significant impact on the japanese stock market, the monetary policy of the Bank of Japan remains a key factor in determining investors' long-term preferences. In March of this year, as the central bank ended its negative interest rate policy, the yen weakened, further boosting the performance of value stocks.

Nomura believes that if the central bank continues to push for policy normalization, further interest rate hikes or adjustments to the algo easing policy will help maintain the long-term attractiveness of value stocks.

It is believed that the interest rate situation in japan, especially the monetary policy of the Bank of Japan, is the most important driving factor for long-term investors in the japanese stock market.

Looking ahead to 2025, Nomura Securities believes that export-oriented value stocks will become the market focus in early next year.

These stocks performed weakly in 2024 due to the appreciation of the yen and global economic uncertainty, but as market concerns about the outcome of the usa election gradually dissipate and the impact of exchange rates is gradually digested by the market, a rebound for these stocks is expected early next year.

According to research report data, as of mid-November 2024, signs of recovery in the performance of export-oriented value stocks have begun to appear. In addition, the report points out that based on historical data since 1993, value indicators typically perform better in the first half of each year compared to the second half, which also supports the market in early 2025.

Editor/rice