It was reported that the Nikkei Average had temporarily recovered to the ¥70,000 range. Ide Shingo (井出真吾) of NLI Research Institute explains how he views next year's level based on fundamentals and the trend in EPS.
The Nikkei Average was reported in a flash update to have temporarily recovered to the ¥70,000 range, and Ide Shingo (井出真吾), a guest equity strategist on Nikkei CNBC Online, explained the outlook. The perspective presented takes into account the effects of the macroeconomic and interest-rate environment in assessing next year's level.
It was noted that EPS growth could drive a decline in the P/E ratio, and that the restrained P/E level would affect next year's performance.
An estimate put the Nikkei Average at around ¥69,685 at a P/E of 16x based on the latest EPS. If the expected 5% increase in EPS after the earnings release continues, it would reach around ¥73,169 at a P/E of 16x.
The yield spread is trending flat, and the view was expressed that interest-rate movements will be key to the market's response. The background to the coexistence of the "good rise in interest rates" and the "bad rise in interest rates" seen to date was also explained.
Ide Shingo (井出真吾) of Nikkei CNBC Online appeared in the commentary, which outlined the programme's approach of examining from multiple angles themes affecting the market, including the macroeconomy, politics, interest rates, and foreign exchange.