Economics & Strategy – Equity Strategy: Second

Down one notch to second place is Masatoshi Kikuchi, who joined Mizuho Securities Group from Bank of America Merrill Lynch in September. “His approach to research is unique and covers a broad range,” explains one portfolio manager. In particular, the strategist “often incorporates the views of academics and politicians, and it’s valuable to hear from specialists on many subjects affecting markets.” Japanese stocks are looking increasingly attractive relative to the rest of Asia’s, Kikuchi reports — so much so that he revised his forecast and now believes the current rally will extend at least through September. He had been anticipating a correction following upper house parliamentary elections in July, “but we now expect the bull market to continue its momentum,” he says. “We see the potential for a resounding Liberal Democratic Party victory to fuel hopes of structural reform.” The robust Nikkei 225 index, which rose 19.3 percent in the first three months of the year, is highly correlated with the devalued currency, he notes; consequently, “I am recommending weak-yen beneficiaries like autos and machinery.” The researcher also expects banking and real estate sectors to outperform, but makers of electronics will underperform, he says, because these companies are no longer competitive. The yen will deteriorate against the dollar by 5 percent a year over the next three years, Kikuchi predicts. — Thomas W. Johnson