Japanese retail investor sentiment toward domestic stocks deteriorated sharply in May, falling from its best level in nearly three years due to deepening worries about the euro zone's debt crisis.
Debt woes in Greece and other European countries that have led to a stronger yen against the euro caused Japanese investors to rapidly turn pessimistic despite an upturn in many corporate earnings in Japan.
The Reuters retail investors poll also showed that nearly 30 percent of respondents favored Brazil as the best place to invest their money among emerging markets. About 18 percent said they favored India followed by 16 percent saying they liked Vietnam.
On the political front, the survey showed the Your Party, a new party formed last year, gathered the most support for a second straight month, extending its support to 35 percent in May from 30 percent last month. The ruling Democratic Party remained in second place with support of 26 percent.
The Reuters sentiment index, calculated by subtracting the percentage of investors who say they are bearish from those who are bullish, fell 24 points to minus 16 in May after seeing a positive reading last month for the first time since July 2007.
The survey of 747 respondents was conducted May 10-13. The Nikkei average <.N225> closed at 10,620.55 on the final day of the survey, down 7 percent from an 18-month high of 11,408.17 marked during the previous survey in April.
The yen has benefited from the euro's weakness on concerns over whether debt-strapped countries such as Greece can smoothly rein in fiscal deficits, and on worries that fiscal austerity measures in the euro zone could weigh on economic growth.
"The debt issue clearly hurt sentiment. Share prices could be weighed down as investors will refrain from taking risks," said a respondent in his 40s.
"It looks like the yen is going to be strong as long as the Greece crisis prevails. This is very worrying for stocks."
Among individual sectors, the automobile and auto parts sector slid 12 points to plus 4 and the materials sector fell 20 points to plus 2.
Japanese investors have been pouring huge funds into Brazil-related mutual funds over the past few years due to healthy economic fundamentals, analysts said.
Increasing consumer spending and prospects of infrastructure development linked to the Olympics and the soccer World Cup are also reasons behind investment from Japan, they said.
The monthly poll, which is conducted anonymously, aims to capture the views of readers of an online magazine aimed at users of the Reuters Japan website http://www.reuters.co.jp
Japan retail investor sentiment plunges on Greece crisis
A poll showed that Vietnam was favored by Japanese investors as one of the best places to invest their money among emerging markets.
Source: Reuters
