< The 2016 All-Japan Research Team

Total Appearances: 5

Analyst Debut: 2011

Hayato Nagayoshi of Mizuho Securities Group wins top honors for a second straight year. The 42-year-old researcher wins the admiration of many asset managers for his daily factor analysis, with one client declaring that the series is “very relevant and something that I refer to on a consistent basis.” In general, Nagayoshi points to macroeconomic factors as more important than micro inputs. Specifically, as it was last year, the persistence of low long-term interest rates is the dominant issue for investors in Japanese equities, he believes. “It encourages smart beta investment,” whereby passive fund managers that don’t take fundamentals into account are thought to cause mispricing, a situation in which “some kinds of assets become overbought with huge divergence from fair value.” Moreover, the researcher notes, low interest rates can also contribute to polarization between sectors, where stocks with higher price-to-earnings ratios rise more than stocks with lower such metrics. As a result, this disparity is at its most extreme since the Internet bubble, which burst in 2000. Alpha from low-beta strategies drives the short-term phenomenon, as exemplified by flows into and out of minimum-volatility investments; while over a longer horizon, fund flows are related strongly to the weak global economy, as reflected by suppressed interest rates and commodities prices, he notes.