TOKYO -- A possible British exit from the European Union and other uncertainties are shattering conventional wisdom on investing in June, leading some investors to look beyond the financial market for clues in their hunt for promising shares.
"There's a move to boost share prices while minimizing risks," said Mitsushige Akino of Ichiyoshi Asset Management. Others said that public funds, not private-sector investors, drove the day's gains.
Trading volume also points toward bearish investor sentiment. Just 1.77 trillion yen ($17 billion) in shares changed hands Tuesday on the first section of the Tokyo Stock Exchange. The daily average so far this month comes to about 1.98 trillion yen, down 20% from last June.
Stocks that have logged strong year-on-year pretax profit growth are usually favored in June, said Kazuhito Yasumura of Mitsubishi UFJ Morgan Stanley Securities. Investors generally continue to bet on companies that did well in the previous fiscal year ended March until April-June quarterly results come out later in the year. But market players seem to be snubbing profit gains in favor of return on equity. They are buying only shares with strong earning power in preparation for a major shift in the market.
Market watchers are fixated on Brexit and other external risks in part because of a lack of domestic factors. No major political factors are expected to emerge until the government finalizes its supplementary budget in September or later. And compared with Prime Minister Shinzo Abe's internationally acclaimed Abenomics, "future Japanese policies based on supplementary budgets and additional easing by the Bank of Japan are less likely to gain traction," said Kyoya Okazawa of BNP Paribas.
Clues to successful investing in this environment could be found outside the financial market. Daisuke Kurioka of Rheos Capital Works explains that it is his job to discover interesting stocks. He looks at a wide range of data in search of the next big thing, from monthly sales reports at smaller corporations to foot traffic in Tokyo's Ginza shopping district to even agricultural damage by deer in Hokkaido.
Japanese population decline drew Kurioka's attention to Maruwa Unyu Kikan, which delivers products from online grocery stores and farming cooperatives. Many stores are shutting down in rural areas with shrinking populations. "The fewer people there are, the more demand there will be for home food delivery," he said.
And J-Com Holdings -- known for shaping inexperienced young workers into motivated salespeople, for example -- could flourish amid the labor shortage. Retail investors stand to learn from Kurioka's ability to connect everything he sees to potential movements in the stock market.