JPMorgan-Japan Quant Equity View Approaching all-time high amid relia...-106513816

JPMORGANAsiaPacificQuantitative&DerivativesStrategy14February2024JapanQuantEquityViewApproachingall-timehighamidrelianceonmomentum--therealpicture;noticeablelossofstableinvestorsThisnoteisbasedondataasof4:00pmJSTonFebruary13,2024.GlobalQuantitativeandDerivativesStrategyNikkei225approaching38,000range:TheNikkei225rallyhasheatedupbymorethanexpected,surgingto38,010onFebruary13.WithUSandGermanequityMasanariTakadaACmarketshittingall-timehighs,speculationthatJapaneseequitywillbenextappearstobethelonedriver.Ofcourse,veryfewnegativesareevidentindomestic(81-3)6736-8636andoverseasmarkets(volatilityhasstayedlow),andUS10-yearyieldsofaroundmasanari.takada@jpmorgan.com4.1%(=dollarstrength,yenweakness)havemadeitdifficultforbothbullsandJPMorganSecuritiesJapanCo.,Ltd.bearstoreact(withregardtoriskassets),somorethanafewinvestorsbelieveconditionsoverallarejustrightforJapaneseequities.TonySKLeeHowever,asweexplainbelow,ourquantitativeandderivativesstrategy(QDS)(852)2800-8857teambelievesbothfuturesandcashequityarelookingincreasinglyoverreliantontony.sk.lee@jpmorgan.commomentumandarenowoutofstepwithfundamentaltrendssuchasearningsandJ.P.MorganSecurities(AsiaPacific)Limited/J.P.stablebuyingbyoverseasinvestors.Meanwhile,powerfulflowsledbyMorganBroking(HongKong)Limitedalgorithmic-typetradingarecurrentlydrivingthemarkettowarditsall-timeh...