Fluctuations in Commission Income and Trading Revenue Due to Market Conditions

「During this period, the Nikkei Stock Average plunged from the ¥35,000 range at the end of March of the prior period to the ¥31,000 range in April at the beginning of the period, then rose while gradually lifting its floor and reached the ¥58,000 level in February after the start of the new year, setting a record high. As equity markets around the world fell following fighting in the Middle East, however, the Nikkei also weakened, and the share price at the end of the period was in the ¥51,000 range.」

「During this period, the Nikkei Stock Average fell from the ¥40,000 range at the end of March of the prior fiscal year to the ¥36,000 range, then moved within a narrow ¥38,000 to ¥39,000 range before rising in July to the ¥42,000 range and reaching a record high against a backdrop of gains in overseas equity markets. Subsequently, triggered by concerns over a deterioration in the US economy, the Nikkei plunged to the ¥31,000 range in early August and then rebounded sharply, but upside remained limited. After the start of the new year, the market turned risk-off whenever the Trump administration in the United States introduced new tariff policies, and the share price at the end of the period fell to the ¥35,000 range, down ¥5,000 from the end of the prior period.」

「Japan’s equity market remained range-bound with limited upside against a backdrop of cautious views on the future earnings of domestic companies and rising long-term interest rates. From July onward, however, the market fluctuated sharply. In August, there was a sharp sell-off severe enough to concern financial authorities, followed by a rapid recovery, but yen appreciation weighed on the market, preventing equities from recovering to the level at the end of the prior period.」

「During the nine months ended the third quarter, share prices rose and reached highs not seen since the collapse of the bubble economy, driven by economic stability, yen depreciation, the government’s Doubling Asset-based Income Plan, expectations for governance reforms at Japanese companies, and strong corporate earnings. The market performed strongly.」

「During the six months ended the second quarter, share prices rose and reached highs not seen since the collapse of the bubble economy, driven by economic stability, yen depreciation, the government’s Doubling Asset-based Income Plan, and expectations for governance reforms at Japanese companies. The market performed strongly.」

「During the three months ended the first quarter, share prices rose and reached highs not seen since the collapse of the bubble economy, driven by yen depreciation in the foreign exchange market, the Bank of Japan’s continued monetary easing, the government’s Doubling Asset-based Income Plan, and expectations for governance reforms focused on capital costs and share prices requested by the Tokyo Stock Exchange of listed companies.」

「During the nine months ended the third quarter, Japan’s equity markets faced a ceiling, following the trend of major adjustments in equity markets around the world amid global inflation and monetary tightening.」

「During the six months ended the second quarter, Japan’s equity markets faced a ceiling and were weak. Although the domestic economy is expected to move toward recovery as society transitions to a new post-pandemic normal, supported in part by various government policies, concern remains that a downturn in overseas economies against a backdrop of global monetary tightening could weigh on Japan’s economy.」

「During the three months ended the first quarter, Japan’s equity markets were soft against a backdrop of concerns over a slowdown in the global economy.」

「During the fiscal year, Japan’s equity markets shifted from a directionless market to a declining market. While corporate business conditions and earnings improved as economic and social activity normalized, uncertainty over the economic outlook increased due to the spread of the Omicron variant of COVID-19 and surging resource and energy prices amid the Ukraine crisis, causing share prices to fall toward the end of the fiscal year.」

「During the nine months ended the third quarter, Japan’s equity markets were weak. In the United States and Europe, share prices rose on improving economic indicators and strong corporate earnings, with the NY Dow reaching a record high. In Japan, however, investor risk-on and risk-off attitudes were evenly balanced amid concerns over the Omicron variant of COVID-19, and the market was generally soft, failing to follow the rise in Western equity markets.」

「During the six months ended the second quarter, Japan’s equity markets were weak, lagging behind Western markets. In the United States and Europe, share prices rose on progress in vaccinations and growing expectations for an economic recovery, with the NY Dow reaching a record high. In Japan, however, share prices faced a ceiling against a backdrop including the resurgence of COVID-19. Despite a major rise in the final month of the period, the market was generally soft.」

「During the three months ended the first quarter, Japan’s equity markets were generally weak. In the United States and Europe, major equity markets were broadly firm as expectations for an economic recovery grew due to progress in vaccinations and the containment of infections. In Japan, however, the domestic equity market lagged behind Western markets and faced a ceiling against a backdrop including the country’s first negative growth in three quarters, delays in vaccinations, and the third declaration of a state of emergency.」

「During the fiscal year, Japan’s equity markets reversed the decline at the end of the prior fiscal year caused by the spread of COVID-19. Risk-on activity generally continued, resulting in a rising market.」

「During the nine months ended the third quarter, Japan’s equity markets rebounded sharply from the sell-off at the end of the prior fiscal year caused by the spread of COVID-19, after which risk-on activity generally continued. Although concerns over the global spread of COVID-19 remained, expectations grew that the global economy would normalize against a backdrop of proactive fiscal and monetary policies in various countries and the development and rollout of vaccines. The NY Dow reached a record high, and Japanese equity markets also surged toward year-end, reaching highs not seen since the collapse of the bubble economy.」

「During the six months ended the second quarter, Japan’s equity markets rebounded sharply from the sell-off at the end of the prior fiscal year caused by the spread of COVID-19, after which risk-on activity generally continued.」

「During the three months ended the first quarter, Japan’s equity markets rebounded sharply from the sell-off at the end of the prior fiscal year caused by the spread of COVID-19 and were generally firm.」

「After the start of the year, equity markets suffered a historic sell-off against a backdrop of the global spread of COVID-19, concerns over the resulting economic slowdown, and yen appreciation against the US dollar. During this period, the Nikkei Stock Average initially fluctuated between ¥20,000 and ¥22,000 before rising to the ¥24,000 range, its highest level in 14 months, but then fell sharply to the ¥16,000 range.」

「During the nine months ended the third quarter, Japan’s equity markets initially faced a ceiling, as investor sentiment did not turn bullish against a backdrop of unstable overseas markets, particularly in the United States and Europe. In the latter half, however, the market turned higher as US-China negotiations progressed toward a partial agreement, uncertainty over Brexit and other issues eased, and the yen weakened.」

「During the second quarter, Japan’s equity markets were unstable, with share prices repeatedly moving up and down as bullish and bearish investor sentiment alternated over the outlook for the domestic economy and corporate earnings amid an unstable and uncertain external environment, including US-China trade tensions, Brexit, trends in Western equity and foreign exchange markets, and concerns over deteriorating Japan-South Korea relations.」

「During the first quarter, the domestic equity market was unstable and moved up and down as bullish and bearish investor sentiment over the outlook for the domestic economy and corporate earnings alternated against an uncertain external environment, including US-China trade friction, monetary policy by US and European financial authorities and the UK's withdrawal from the European Union.」

「The Nikkei Stock Average, Japan's main equity index, plunged from the ¥24,000 range reached in September to the ¥18,000 range and then remained weak through the end of the period. As a result, commissions received fell from the previous fiscal year to ¥161 million (61.9% compared with the previous fiscal year).」

「Investor risk aversion intensified against a backdrop of US-China trade friction, the US stance on interest-rate increases, caution over the US president's policy administration and uncertainty over the outlook for the global economy. The Nikkei Stock Average, Japan's main equity index, consequently weakened, falling sharply from the ¥24,000 range reached in September to the ¥18,000 range.」

「During the first six months, the domestic equity market surged at the end of September, but otherwise lacked a clear direction as positive factors, including expectations for improved corporate earnings and resilience in US equities, were offset by concerns over US-China trade friction, political issues in southern Europe and currency declines in emerging markets.」

「During the first quarter, the domestic equity market lacked a clear direction as positive factors, including strong earnings reported by companies on a daily basis, expectations for improved corporate earnings due to yen depreciation against the US dollar, and resilience in US equities, were offset by concerns over US-China trade friction and political instability in southern Europe, including Italy. In customer-facing sales, the company continued proposing solutions tailored to individual customer needs, including trading strategies using exchange-listed derivatives such as individual stock options and asset-building proposals through products such as tsumitate NISA. As a result, commissions received were ¥46 million (90.9% year on year). In the proprietary trading division, trading income and losses amounted to ¥146 million (25.2% year on year), affected in part by a decline in valuation gains on securities held compared with the same period of the previous year.」

「In the fiscal year, both the sales division and the proprietary trading division outperformed the previous period against a backdrop of buoyant domestic equity markets. Commissions received were ¥260 million (124.0% year on year), and trading gains and losses in the proprietary trading division were ¥744 million (319.6%).」

「Through the third quarter, the domestic equity market generally remained firm, despite a temporary correction due to geopolitical issues including the situation on the Korean Peninsula, against a backdrop of solid earnings at domestic companies and buoyant US equity markets. The Nikkei Stock Average also reached a new post-bubble high, rising sharply by 4,000 points from April at the start of the period.」

「The market subsequently underwent a temporary correction due to geopolitical issues, including the situation on the Korean Peninsula and terrorism in Europe, as well as political turmoil in the United States, but conditions strengthened again toward the end of September.」

「The domestic equity market initially moved lower amid concerns about geopolitical risks and political instability in Europe. However, it subsequently entered an uptrend against a backdrop of solid corporate earnings and resilience in US equities, with positive factors including the defeat of far-right forces in the French presidential election. The Nikkei Stock Average, a major equity index, returned to the ¥20,000 range for the first time in approximately 1.5 years, since December 2015.」

「The domestic equity market was sluggish during the first half, amid deteriorating market sentiment due to a slowdown in emerging-market economies, Brexit, yen appreciation in the foreign-exchange market and uncertainty over US interest-rate increases. As a result, commissions received for the period declined slightly from the previous year to ¥210 million (91.2% compared with the previous fiscal year). Trading income and losses amounted to ¥232 million (41.6% compared with the previous fiscal year).」

「We also continued to hold individual seminars and other events conducted in prior periods and focused on proposing new products that matched customer needs. Commission income was ¥155 million, or 83.0% of the prior-year period, partly due to weak market conditions through October.」

「Commissions received remained sluggish, partly because of weak market conditions, and amounted to ¥92 million (73.7% year on year). In the proprietary trading division, gains from ordinary trading operations remained strong, but were insufficient to cover valuation losses on securities held. Trading income and losses therefore amounted to a loss of ¥31 million, compared with income of ¥345 million in the same period of the previous year.」

「Amid these weak market conditions, gains from ordinary trading operations in the proprietary trading division were strong. However, global equity markets fell sharply toward the end of the quarter against the backdrop of Brexit, and valuation losses on securities held expanded significantly as a result. Trading income and losses therefore amounted to a loss of ¥483 million, compared with income of ¥443 million in the same period of the previous year. In customer-facing sales, the company continued to hold individual seminars and focus on proposing new products suited to customer needs, but commissions received remained sluggish at ¥49 million (72.6% year on year).」

「They may fluctuate significantly depending on the level of trading value in the securities market, market trends and economic conditions.」