Did you buy Japanese stocks in October in growth and sell at value? Is the Morgan S forecast fund reversed

It seems that strategists such as Mr. Gilbert Wong of Morgan Stanley are predicting that growth (growth) stocks will outperform value (undervalued) stocks for Japanese stocks in October. According to Bloomberg on 10/3, Mr. Wong and his colleagues indicated in the report that “the trend of short covers will accelerate in October, and price action will be drastically reversed in each sector.”

Also, it is said that long-only (buyers) investors have increased the weight of Hitachi, KDDI, and Panasonic Holdings, and the positions of Toyota, Keyence, Daikin Industries, and Renesas Electronics are shrinking.

On the 5th, Japanese stocks rebounded for the first time in 6 days. The Mothers Index, which is centered on emerging and growing companies, was 3.3% higher than the previous day, and there was an overwhelmingly strong rebound compared to the 1.8% increase in the Nikkei Stock Average and the 2.0% increase in TOPIX. However, from observations that US interest rates remain high, there is a strong sense of caution against further stock price declines, and the hurdle of buying growth stocks, where the sense of price intensifies due to high interest rates, is particularly high.

In the first place, the evasion attitude from stocks themselves is also spreading due to the rapid rise in long-term US interest rates. Famous investor Bill Gross, who served as the chief investment officer (CIO) at Pacific Investment Management (PIMCO), a major US bond management company, pointed out in the investment outlook announced on the 4th that stocks are “clearly overvalued,” and that both bonds and stocks are not attractive even after they have been sold in a big way recently. (Bloomberg on the 5th)

In the US stock market on the 3rd, the “fear and greed (fear and desire) index” calculated by US CNN, which measures investor sentiment, became the level of “extreme fear (ultimate fear)” with the lowest risk tolerance, and it has been low since 2022/10. Pictet Japan strategist Tanaka Junpei told the Nihon Keizai Shimbun that “unless long-term interest rates stop rising, it is difficult to dispel the pessimistic mood.” The Nikkei Stock Average was also oversold on the 4th, and the RSI (stock price relative strength index, 14 days), which is an indicator that measures overbought, fell below 30, and entered the oversold zone. This is the second time this year that it has fallen below 30.

Source: Nihon Keizai Shimbun, Bloomberg, CNN, Moomoo