Why Invest in
CSOP Nikkei 225 Index Product Series?
1. Global Triumph: Japanese Stocks Soar to a 34-Year High
The Nikkei 225 Index rose 30% in 2023, leading all major global markets. At the beginning of 2024, it climbed to a new peak, breaking through 34,000 points, setting a new high since March 1990 (when the asset bubble burst).
3 Source: Bloomberg, 12/30/2022 - 12/29/2023. Except for the Taiwan Stock Exchange Weighted Index (Bloomberg code: TWSE Index), all are net total return indices. H-Share-Hang Seng Index, A-Share-CSI300 Index, UK-FTSE 100 Index, Vietnam-FTSE Vietnam 30 Index, Saudi Arabia-FTSE Saudi Arabia Index, Australia-S&P/ASX 200 Index, APAC-FTSE Asia Pacific Low Carbon Select Index, France-CAC 40 Index, German-DAX Index, India-Nifty50 Index, Euro Zone-Euro STOXX Index, South Korea-KOSPI Index, US-S&P 500 Index, Taiwan China-TWSE Index, Japan-Nikkei 225 Index.
4 Source: Bloomberg. The Nikkei 225 Index - Price Return starts from the index base date of 12/28/1979, and the Nikkei 225 Index - Net Total Return starts from the earliest available data of 1/4/2002 on Bloomberg, standardized according to the index price level of 100 on 1/4/2002.
For illustration purpose only. Not to be constituted as a recommendation to buy/sell securities in the above-mentioned sectors or investment types.
2. Three Arrows Unleashed: A Surge in Attraction for the Japanese Stock Market
First Arrow: Buffett's Increased Stake Ignites Japanese Stocks
In April 2023, Warren Buffett visited Japan for the first time in 12 years. Subsequently, he repeatedly increased his holdings, making Japanese stocks his largest overseas investment. The world's attention is once again focused on this former Asian leader. After the trip to Japan, the "Buffett Effect" is significant, attracting the attention of overseas investors to the Japanese stock market, with many institutions buying Japanese stocks in large quantities.
2020:
- Warren Buffett's investment group, Berkshire Hathaway, announced the purchase of more than 5% of shares in each of Japan's five leading trading groups - Mitsubishi Corp, Mitsui & Co., Itochu, Marubeni and Sumitomo Corp.
2022:
- Berkshire Hathaway announced that it would increase its stake in each of the five trading houses to around 6%.
April 2023:
- Buffett visited Japan for the first time in 12 years.
- Berkshire Hathaway has escalated its stake in Japan's five major trading houses to 7.4%, marking it as the company's most substantial investment outside the United States. The firm plans to maintain its collaboration with these companies in the future.
- Buffett expresses intention to increase holdings of Japanese stocks.
November 2023:
- Berkshire Hathaway raised funds equivalent to $827 million USD by issuing Yen-denominated bonds, sparking expectations that he might invest more in Japan.
Source: Compiled from media reports such as Nikkei Asia.
Second Arrow: Breaking the Decades-Long Deflation Curse
The virtuous cycle of wages and inflation is expected to pull Japan out of years of deflation, achieving mild and sustainable growth in inflation and the economy. In August 2023, the Japanese government expressed that the 25-year-long battle against deflation may have reached a significant turning point.
Source: Bloomberg.
The core CPI is the Consumer Price Index excluding fresh food.
Third Arrow: “Price-to-Book Ratio Reform” Boosts Corporate Valuations
The valuation of the Japanese stock market has been low for a long time. In March 2023, the Tokyo Stock Exchange introduced a new regulation to address the situation where the Price-to-Book Ratio (PBR), which can undermine shareholder value, falls below 1. The new rule mandates that, "For listed companies with a Price-to-Book Ratio consistently below 1, it is required to disclose their policies and specific initiatives for improvement". The specific initiatives include:

Share buybacks

Short-term -
Increase Dividend

Long-term -
Improve profitability
Record Highs in Japanese Dividends and Stock Buybacks 5
5 Source: Nikkei Analysis. The stock buyback for the 2023 fiscal year is estimated data.
For illustration purpose only. Not to be constituted as a recommendation to buy/sell securities in the above-mentioned sectors or investment types.
3. Foreign Funds Flood In: A Decade-High Inflow into Japan
In 2023, overseas investors made a net purchase of Japanese stocks and futures amounting to 6.3 trillion Yen (approximately 43.39 billion USD). The net inflow of stock alone reached a scale of 3.12 trillion Yen, breaking a three-year record of net selling and setting a new high since the implementation of Abenomics in 2013.
Historic Net Purchases of Japanese Stocks and Futures by Overseas Investors (Billion Yen)
Source: Japan Exchange Group, Reuters.
For illustration purpose only. Not to be constituted as a recommendation to buy/sell securities in the above-mentioned sectors or investment types.
4. Flagship of Japanese Stocks: Nikkei 225 Index
The Nikkei Stock Average Index, also known as the Nikkei 225 Index, stands as the premier representative index for Japanese stocks on a global scale.
The Nikkei Stock Average Index (also known as the Nikkei 225 Index) 6
Liquidity: The top 450 (double the constituent count for the Underlying Index) of the most liquid stocks are ranked in descending order of liquidity
Industry Balance:Stocks are selected and categorised into six industrial sectors – Technology, Financials, Consumer Goods, Industrial Materials, Capital Goods/others and Transportation/Utilities. A rebalancing is conducted if any of the sectors are over-represented or under-represented
After adjusting for liquidity and industry balance, the total number of index constituents is set at 225
A net total return index
Sector Breakdown 7
The top 20 constituent stocks of the index 8
| # | Code | Name | Sector | Weighting (%) |
|---|---|---|---|---|
| 1 | 9983 | FAST RETAILING CO., LTD. | Consumer Goods | 10.44% |
| 2 | 8035 | TOKYO ELECTRON LTD. | Technology | 7.43% |
| 3 | 6857 | ADVANTEST CORP. | Technology | 3.84% |
| 4 | 9984 | SOFTBANK GROUP CORP. | Technology | 3.67% |
| 5 | 9433 | KDDI CORP. | Technology | 2.77% |
| 6 | 4063 | SHIN-ETSU CHEMICAL CO., LTD. | Materials | 2.66% |
| 7 | 6367 | DAIKIN INDUSTRIES, LTD. | Capital Goods/Others | 2.30% |
| 8 | 6954 | FANUC CORP. | Technology | 2.05% |
| 9 | 6762 | TDK CORP. | Technology | 1.95% |
| 10 | 4543 | TERUMO CORP. | Technology | 1.89% |
| 11 | 6098 | RECRUIT HOLDINGS CO., LTD. | Consumer Goods | 1.69% |
| 12 | 4519 | CHUGAI PHARMACEUTICAL CO., LTD. | Technology | 1.66% |
| 13 | 6971 | KYOCERA CORP. | Technology | 1.64% |
| 14 | 6758 | SONY GROUP CORP. | Technology | 1.36% |
| 15 | 7203 | TOYOTA MOTOR CORP. | Technology | 1.35% |
| 16 | 6920 | LASERTEC CORP. | Technology | 1.32% |
| 17 | 4568 | DAIICHI SANKYO CO., LTD. | Technology | 1.28% |
| 18 | 6988 | NITTO DENKO CORP. | Materials | 1.05% |
| 19 | 9735 | SECOM CO., LTD. | Consumer Goods | 1.03% |
| 20 | 9613 | NTT DATA GROUP CORP. | Technology | 0.99% |
6 Source: Nikkei.
7 Source: Nikkei, as of 1/11/2024.
8 Source: Nikkei, as of 1/11/2024.