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Nomura Reclaims the Crown in Japan Sales

Money managers and analysts favored the Tokyo-based firm over its competitors in Institutional Investor's 2018 All-Japan Sales Team.

  • By Alexandra DeLuca

From The All-Japan Sales Team 2018 ranking

Nomura has regained its top spot in Institutional Investor's annual All-Japan Sales Team, just one year after slipping to second place for the first time since the survey's 2012 inception.

The firm unseats Mizuho Securities Group, whose equity sales team places second as it has in the lion's share of previous surveys. SMBC Nikko Securities ranks third, followed by Daiwa Securities Group in fourth, and Mitsubishi UFJ Morgan Stanley Co. in fifth.

The 2018 ranking was decided by participants in the larger All-Japan Research Team survey. Nearly 700 buy-side analysts and money managers - representing 359 firms and collectively managing about $822 billion in Japanese equity assets - ranked their top four generalist salespeople. These individual votes were then combined to form a firm's sales team.

Respondents were asked to consider 8 sales attributes including providing special services, understanding client needs, and knowledge and communication of the research product.

Facilitating access to analysts and responsiveness were additional considerations. Masatomo Harigaya, joint head of Japan equity sales at Nomura, attributed his team's success to a "close collaboration" with Nomura's macroeconomic research team. In addition, the firm hosts client seminars and field trips with key specialists.

"We have always worked alongside and have a strong relationship with our clients," Harigaya said. "Close communication with [them] provides us with ample important information, and we process this information wisely by utilizing the latest technologies."

Nomura is investing in artificial intelligence technology ranging¬¬ from client relationship tools to chat bots, as well as leveraging large swathes of client information to make "more organic and efficient" decisions through data analytics.

Providing the best global context for Japan - another sales attribute - is at top of mind for clients, according to Takaaki Kato. Kato is head of equity markets at Citigroup Global Markets Japan, which moved up two spots to seventh place in this year's ranking.

"There is a huge amount of focus from the more macro client base on Japanese monetary policy," he said. "Any tightening by the Bank of Japan could un-anchor the global rate markets, and there are those who are convinced there will be a shift in policy this year. If it does happen, the implications for Japan are significant."

Nomura's Harigaya said clients are "cautiously watching" the Bank's next course of action, as well as worrying about the consequences of a trade war between the U.S. and China.

These monetary tightening concerns coupled with increased volatility are a "reality check" for investors, said Kato.

"Although there is more global, passive and non-fundamental money moving equity markets, there is a greater need for analytical differentiation," he said. "Franchises like ours, with a good research and a macro overlay, will ensure that we can help navigate our clients through the macro storm."

Kato, a Morgan Stanley and Goldman Sachs alum, joined Citi more than a year ago to help improve the equities business across the sales, trading, and execution spectrum. He said the key is "balance and diversification" in experience, skill set, style, and level of seniority.

"There's been a pretty dramatic shift in our personnel from a more similar group of people with a narrower skill set, which had a lot of overlap, to something which is probably a lot more diversified and broad," he said. "Over time, I think it will be much more effective."

Looking ahead, Nomura's Harigaya predicted that the decline in the commission fee pool in cash equity is likely to continue with the widespread adoption of electronic trading and commission unbundling.

"Brokers are fighting for survival and, as such, more sophisticated sales activities will be required to gain access to these shrinking pools," he said.

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