Nomura (US:NMR) Hua Er Jie Jian Wen·2025-10-10 03:56Core Viewpoint - The "Kishida Market" is experiencing a cooling trend after an initial surge following the election of Kishida Sema. The Nikkei 225 index saw a significant rise of over 4% at the beginning of the week, marking its largest single-day gain in months, but the momentum has since diminished, entering a consolidation phase [1][5]. Market Dynamics - The market's upward movement post-Kishida's victory was primarily driven by expectations of fiscal expansion rather than monetary easing. The sustainability of this "Kishida Market" hinges on the new government's ability to maintain high approval ratings and political stability; otherwise, a historical reversal pattern may reoccur [5][6]. - Investor sentiment reflects caution, with speculative investors like Commodity Trading Advisors (CTAs) having over 2 trillion yen in long positions in Japanese stocks, limiting further accumulation and shifting to a "wait-and-see" mode. Macro hedge funds have also paused their buying of Japanese stocks, indicating limited incremental capital in the short term [6][11]. Historical Context - Historical data suggests that stocks related to new government policies typically outperform the market in the weeks following elections, but often experience a reversal in the subsequent three months. Notable exceptions occurred during the administrations of Junichiro Koizumi and Shinzo Abe, where stable high approval ratings led to sustained stock performance [13][16]. - The report emphasizes that the future trajectory of "Kishida-themed stocks" will largely depend on the political landscape. If Kishida can form a stable government and maintain high support, these stocks may see continued upward momentum driven by foreign investors; conversely, political instability could lead to significant declines, particularly in high-volatility stocks [16].