Japanese individual investors became more pessimistic about the stock market in August, worried by further signs of an economic slowdown, profit warnings and selling of Japanese stocks by foreign investors. A perceived lack of government support to shore up the economy also disappointed investors, while a Cabinet reshuffle at the start of the month failed to revive confidence.
Investors became increasingly bearish on the materials and autos sectors amid growing cost pressures from high commodity prices, while their appetite grew for pharmaceuticals stocks. The monthly survey by Reuters showed an index reading of minus 60 in August, a deterioration from minus 50 in July and matching January this year, the lowest level since the survey started in January 2006.
"Stocks are suffering around the world, losing out to bonds and some commodities as investors shy away from equity risk," said Yutaka Miura, senior technical analyst at Shinko Securities. It was the second straight month of deterioration. The index is calculated by subtracting the percentage of investors who say they are bearish from those who are bullish.
Polling was conducted August 11-14, a period in which the benchmark Nikkei average hovered around 13,000, down from the 13,000-13,500 range at the time of the previous survey held July 7-10. The dollar was around 109 yen when the August survey was conducted, against around 107 yen a month earlier.
The Nikkei shed 2 percent on August 13 after gross domestic product data showed Japan's economy shrank 0.6 percent in April-June from the previous quarter, ending three quarters of expansion on weaker exports and the effect of higher prices on consumption.
Investors took the data as showing that the world's second-largest economy was either slipping into a recession or already in one. "Not only is domestic demand slowing but also exports are in poor shape. The government remains without any effective measures," said a man in his 50s who took part in the anonymous poll.
Of 799 retail investors who responded to the survey through the website http:/ /www.investor.reuters.co.jp/home/ 28 percent were in their 60s, 20 percent in their 50s and 24 percent in their 40s. and 92 percent were men.
The government plans to outline an economic package this week to help businesses and individuals cope with rising prices, though conflicting interests within the ruling coalition ahead of a possible snap election have made its size and content uncertain.
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