Sumitomo Mitsui Asset Management Japan Market Memo For information only (No.006) Today’s Topic 16 October, 2014 Outlook of Japanese Equity Market after a Correction Strong corporate earnings to support the equity price Point 1 19,000 Approx. 10% decline from the peak in September 16,000 950 13,000 700 10,000 450 ■Nikkei 225 index of October 16 closed at JPY 14,738.38, sharply declined by JPY 335.14 from the previous day (-2.22%). It fell over 1000 yen in seven working days and fell below 15,000 level this Tuesday since August 2014. ■From this year’s peak of JPY 16,374.14 marked on September 25, the index fell more than JPY 1,600 (approx. -10%). ■In currency market, JPY re-appreciated against US$ back to around 106 yen from above 110 yen level marked in the beginning of October. Point 2 Increasing concern on slowdown of global economy Worries on slow Japanese economic recovery and JPY appreciation ■On October 7, IMF unveiled a downward revision of the global economic growth outlook. It was followed by the announcement of US FOMC meeting minute (for September 16 & 17) on the 8th which pointed out the global economic slowdown led by Europe is a risk factor to the US economy. On October 9, a major German economics research institute published their forecast that the German economy was on a verge of economic recession. ■Following these, the Japanese equity market plunged under the situation that US and European investors took a “risk averse” attitude in the global equity market with increasing concern over the deterioration of global economy and re-appreciation of Japanese yen. Future Outlook Nikkei 225 index & Corporate earnings forecast Nikkei fell over 1000 yen in seven working days (JPY) (JPY) Nikkei 225 index Left Corporate Earnings Forecast Right 7,000 1,200 200 07/1 08/1 09/1 10/1 11/1 12/1 13/1 14/1 (Year/Month) （Note） Data is from Jan.2007 to Oct. 2014 (Monthly). Nikkei 225 index till 16 October, 2014 , Corporate earnings forecast (per share, next FY) till 15 October, 2014. （Source） SMAM, based on Bloomberg L.P. data. 18,000 (JPY) Nikkei 225 index & US$/JPY (US$/JPY) Nikkei 225 index Left US$/JPY Right 17,000 110 108 16,000 106 15,000 104 14,000 102 13,000 100 14/1 14/3 14/5 14/7 14/9 (Year/Month) （Note） Data is from 6 January, 2014 to 16 October, 2014 (Closing price). （Source） SMAM, based on Bloomberg L.P. data. Nevertheless, the Japanese equity market would be supported by the firm business sentiment and solid corporate earnings going forward ■In the BOJ’s Tankan survey released on October 1, those in Japan are expected to keep a firm tone in the business conditions of large corporations the coming future. (manufacturing sector) showed a moderate ■According to the Tankan, the Japanese corporations’ improvement. The future forecast was almost positive, average forex rate of US$/JPY used for their assumptions too. The US ISM index indicated that business sentiment of earnings forecast is JPY 100.73, which is higher than of the US enterprises were kept strong. the current level of around 106 yen. If the current forex ■当資料は、情報提供を目的として、三井住友アセットマネジメントが作成したものです。特定の投資信託、生命保険、株式、債券等の売買を推奨･勧誘す ■The global economy is expected to gradually accelerate rate is maintained, corporate earnings of Japanese るものではありません。■当資料に基づいて取られた投資行動の結果については、当社は責任を負いません。■当資料の内容は作成基準日現在のもので its speed of growth into next year although economic corporations will be revised upward. We have a view あり、将来予告なく変更されることがあります。■当資料に市場環境等についてのデータ・分析等が含まれる場合、それらは過去の実績及び将来の予想で growth rate of Japan, Europe and emerging countries that the Japanese equity market will rise in line with あり、今後の市場環境等を保証するものではありません。■当資料は当社が信頼性が高いと判断した情報等に基づき作成しておりますが、その正確性・完全性を保証するものではありません。■当資料にインデックス･統計資料等が記載される場合、それらの知的所有権その他の一切の権利は、その発行者お were revised downward. Based on these outlook, the earnings improvement as uncertainties over よび許諾者に帰属します。■当資料に掲載されている写真がある場合、写真はイメージであり、本文とは関係ない場合があります。 corporate earnings of world key companies including the global economy fade away. Sumitomo Mitsui Asset Management Japan Market Memo (No.004) For information only 25 September, 2014  Disclaimer Please read this disclaimer carefully.  This material is for non-Japanese institutional investors only.  The research and analysis included in this report, and those opinions or judgments as outcomes thereof, are intended to introduce or demonstrate capabilities and expertise of Sumitomo Mitsui Asset Management Company, Ltd. (hereinafter “SMAM”), or to provide information on investment strategies and opportunities. 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It is strictly prohibited from using this material for investments, reproducing/copying this material without SMAM’s authorization, or from disclosing this material to a third party. Registered Number: Kanto Local Finance Bureau (KINSHO) No.399 Member of Japan Investment Advisers Association and the Investment Trusts Association, Japan © Sumitomo Mitsui Asset Management Company, Limited ■当資料は、情報提供を目的として、三井住友アセットマネジメントが作成したものです。特定の投資信託、生命保険、株式、債券等の売買を推奨･勧誘するものではありません。■当資料に基づいて取られた投資行動の結果については、当社は責任を負いません。■当資料の内容は作成基準日現在のものであり、将来予告なく変更されることがあります。■当資料に市場環境等についてのデータ・分析等が含まれる場合、それらは過去の実績及び将来の予想であり、今後の市場環境等を保証するものではありません。■当資料は当社が信頼性が高いと判断した情報等に基づき作成しておりますが、その正確性・完全性を保証するものではありません。■当資料にインデックス･統計資料等が記載される場合、それらの知的所有権その他の一切の権利は、その発行者および許諾者に帰属します。■当資料に掲載されている写真がある場合、写真はイメージであり、本文とは関係ない場合があります。