Nomura Releases Results of Individual Investors Survey: A Decreasing % Intend to Vote for All Resolutions

Nomura has released the results of its Individual Investors Survey. The results pertaining to governance matters, intentions regarding exercising voting rights at general shareholders‘ meetings, are set forth at the bottom, but the main gist is that: Of the respondents saying they planned to exercise their voting rights, 25.8% said they intended to vote in favor of all resolutions, down from 28.0% that said so in the May 2011 survey. Of resolutions respondents said they might oppose, as in May 2011 the highest response ratios were for retirement bonuses for directors, director compensation, and dividends (use of surplus funds).

1. Survey overview

(1) Nomura I-View Index down 13.8pt m-m at 46.8

The Nomura Individual Investor Market View Index (Nomura I-View Index), based on respondents' three-month outlook for share prices and calculated by subtracting the percentage of responses for fall from that for rise, was 46.8 for May, down 13.8 point from the previous month. Fewer individual investors said they expect share prices to increase. The proportions of respondents expecting rises of about 1,000 points, about 2,000 points and more than 2,000 points all declined, while among responses from investors expecting share prices to fall, the largest m-m rise was for the proportion expecting a decline of about 1,000 points.

(2) Greatly increased focus on international affairs

Respondents were asked to select the factor most likely to impact the stock market in the next three months. International affairs was selected by 53.2% of respondents, a sharp climb of 15.3ppt from last month. Responses for all other factors were down from the previous month, except for a small increase for weather & natural disasters. The ranking of all factors has remained unchanged since September 2011.

(3) Materials becomes most attractive sector

Respondents were asked to choose one sector as an ―appealing? investment target and one as ―unappealing? over the next three months. We calculated a diffusion index for each sector by subtracting the percentage of responses for unappealing from that for appealing. Materials moved into first place this month, while the largest rise in DI, of 8.2pt m-m, was for consumer goods. Autos dropped out of first place with a 9.5pt decline, the largest of any sector this month, and its position in the ranking fell sharply too.

(4) Rising expectations of yen appreciation versus US dollar

On the outlook for the USD/JPY rate over the next three months, the total percentage of respondents expecting the yen to strengthen against the dollar was 48.7%, up 15.9ppt from last month. The individual response with the largest increase this month (up 12.4ppt from the previous month) was a rise of about 5 against the dollar, while the biggest decline (down 12.7ppt) was for a fall of about 5 against the dollar.

(5) Sharp decrease in euro's appeal

Respondents were asked to choose one currency as an appealing investment target and one as unappealing over the next three months. We calculated a diffusion index for each currency by subtracting the percentage of responses for unappealing from that for appealing. The Australian dollar was the most appealing currency for the 28th straight time since this survey question was introduced in January 2010 (no survey was conducted in April 2011), and its DI also rose from the previous month. The largest advancer was the renminbi, although its DI remained negative. The euro's DI was the biggest decliner, falling 15.6pt from the previous month.

(6) Decreased appetite for financial instruments other than investment trusts

To give an indication of plans for holding financial instruments, we calculate DIs for each financial instrument by subtracting the percentage of respondents planning to cease holding the instrument or decrease their holding from the percentage planning to hold the instrument for the first time or increase their holding. The DIs for all financial instruments fell from the previous month, with the expection of a slight increase for investment trusts.

(7) Intentions regarding exercising voting rights at general shareholders‘ meetings

For this month's spot question, we asked individual investors about their views on exercising voting rights at upcoming general shareholders meetings: 38.7% of respondents said they intended to exercise their rights, while 30.6% said they planned not to. Of the respondents saying they planned to exercise their voting rights, 25.8% said they intended to vote in favor of all resolutions, down from 28.0% that said so in the May 2011 survey. Of resolutions respondents said they might oppose, as in May 2011 the highest response ratios were for retirement bonuses for directors, director compensation, and dividends (use of surplus funds).

The entire report can be downloaded here. (Please click on download original asset at the lower right.)

http://bdti.mastertree.jp/f/lgh0tmbz

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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