Japan Takes Equity Uncertainty to Another Level

(Bloomberg) -- While a thousand points divides bulls from bears on the outlook for the S&P 500, the figure for Japan is more like 11,000.

That’s the gap between the highest and lowest year-end forecast for the Nikkei 225 Stock Average, according to a monthly survey of five Japanese asset managers and brokerages. Nomura sees the blue chip gauge at 23,000 by the end of 2020 -- up from about 19,800 Friday -- while renowned bear Myojo Asset Management Co. expects a decidedly more pessimistic plunge to 12,000.

The five-digit difference compares with a 3,000 point gap in January -- which didn’t include Myojo, according to data compiled by Bloomberg. Some strategists have warned of the possibility of another sell-off that could send Japanese stocks back to test the lows seen in March, while others have said the worst is behind investors.

For those who argue the number of respondents is too small and prefer the bottom-up approach, an aggregate of average analyst target prices for the Nikkei’s constituents has the benchmark rising to 24,150 over the next 12-months. That’s a healthy 22% gain from current levels.

“It feels like there’s not much point in discussing stock market trends,” said Oki Matsumoto, chief executive of Monex Group Inc. “But what I do think these days is that the stock market is much more lively than what we see and feel is happening with our daily and economic activities.”

The Nikkei climbed as much as 3.1% on Friday, on track to post a 20% rebound from its March low, the signal of a technical bull market. The gauge tumbled into bearish territory last month in the wake of the global virus outbreak.

“Confidence is rising that the U.S. is seeing light at the end of the virus tunnel,” said John Vail, the chief global strategist of Nikko Asset Management Co. “Also, the Bank of Japan may soon increase its stimulus by loosening the constraints on its corporate bond buying program.”

Stocks climbed across the region Friday, and U.S. futures jumped as President Donald Trump outlined plans to reopen the world’s largest economy.

©2020 Bloomberg L.P.