Toyota’s PBR has risen above 1x—who’s next? – 長期投資で年金問題なんて怖くない

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While AI-related stocks face selling pressure, capital is flowing into software companies and quantum computing-related stocks.

In the software sector, SAP rose 9.3% week-over-week, Salesforce gained 8.0%, and Microsoft climbed 17.5%. However, none have yet recovered to their levels from the start of the year. The Trade Desk and Palantir saw fluctuations of only around 1–2%.

Shares of major digital advertising agency The Trade Desk are down approximately 52% year-to-date, significantly underperforming the S&P 500 index, which is up 9.2%.

Consumer behavior in the advertising industry is shifting due to the spread of AI; consumers are increasingly utilizing AI when purchasing products. How AI is integrated into advertising will likely be a key factor moving forward.

・Semiconductors: Mixed performance

Semiconductor-related stocks showed mixed movements. While many in the sector faced selling pressure, Advantest rose 12% week-over-week. Significant volatility is expected in semiconductor stocks next week as well. Attention will likely focus on Kioxia, which hit the daily upper limit (limit-up) at the end of the week. Although the company announced an 800 billion yen share buyback and a 1-for-3 stock split,

the anticipated dividend was not implemented. Its share price dropped by 2,000 yen in PTS (Proprietary Trading System) trading. The margin buying ratio stands at 20x, indicating an accumulation of outstanding margin buy positions. Much like Fujikura—a stock driven by high expectations—there is a heavy volume of sell orders waiting at higher price levels.

・Japan: NT Ratio falls to 16.07x

This week, the Nikkei Average fell more sharply than the TOPIX, causing the NT ratio to contract. Nevertheless, at approximately 16x, the ratio remains high compared to historical levels. The Nikkei Average still appears overvalued; therefore, it is best to avoid chasing overvalued stocks.

・Panasonic: Catching up to Sony

At the start of the year, Panasonic’s PBR was below 1x. It has since been bought up to 1.85x.

The share price has more than doubled year-to-date. Panasonic has a strong image as a company unable to change. The gap between its stock price and that of its former rival, Sony, has only continued to widen. Sony has grown by shifting its business segments with the times—moving from consumer electronics into gaming, software, and entertainment—and its stock price has risen steadily. Meanwhile, Panasonic’s stock price has languished during this period, frequently trading below a price-to-book ratio (PBR) of 1.0.

Around 2012, the two companies traded at similar stock price levels. Compared to that time, Sony’s stock price has risen 22-fold, while Panasonic’s has risen 8-fold—a 14-fold difference. To what extent will this gap narrow?

Sony’s operating profit margin stands at 16.7% compared to Panasonic’s 9.1%, while its net profit margin is 12.05% versus Panasonic’s 6.6%. Panasonic really needs to improve its profit margins.

・Caterpillar vs. Komatsu

As the “AI bubble” surrounding Caterpillar bursts, Komatsu’s stock has remained firm. Furthermore, the appreciation of the yen has caused the Caterpillar-to-Komatsu stock price ratio to contract to 9.1. Caterpillar is scheduled to announce its earnings on August 4. Since Caterpillar’s stock is currently overvalued, the ratio is trending downward. The play here is to sell Caterpillar and buy Komatsu!

・Strong Correlation Between South Korea ETF and Semiconductor Index (SOX)

A South Korea ETF listed on the US market fell 3.6% this week. This ETF tracks the MSCI 25/50 Index and is composed of companies across sectors such as consumer goods, finance, and IT.

The correlation coefficient between the two is 0.74, indicating a strong correlation. Both have posted a 53% gain year-to-date.・Stocks trading below 1x PBR: 562 (TOPIX); an increase of 6 from the previous week.

With Toyota’s PBR rising above 1x, Honda Motor has become the largest stock by market capitalization trading below 1x PBR (market cap: ¥7.37 trillion; PBR: 0.54x). Japan Post Holdings follows with a market cap of ¥6.7 trillion and a PBR of 0.69x.

Among stocks trading below 1x PBR, the biggest gainers over the week were Okinawa Electric Power (up 14.2%) and Komori Corporation (up 13%).

In terms of year-to-date returns, regional banks have shown remarkable growth. Seven of the top ten performers year-to-date are regional banks: Fukui Bank (124.2%), Oita Bank (99.4%), Yamagata Bank (97.9%), Awa Bank (92.9%), Shikoku Bank (92.1%), Aichi Financial Group (91.1%), and Ehime Bank (90.1%).

Although regional bank stock prices fell last week, earnings improvements are anticipated, making stocks trading below 1x PBR attractive investment candidates.

・Commodities: Yen appreciation drives price declines.

The yen strengthened by 3.9% week-on-week following the Bank of Japan’s yen-buying intervention. Combined with the stronger yen, falling grain prices caused a significant drop in yen-denominated commodity prices. Declines from the previous week included wheat (-8.2%), corn (-7.6%), crude oil (-7.7%), and natural gas (-6.9%).

・Mortgage rates: Fixed rates rise.

Mizuho Bank raised its fixed mortgage rate by 0.15%, bringing it to 5.45%. Regarding the choice between fixed and variable rates…

Personally, I believe a variable rate is the better choice at the moment. If you are concerned about inflation, consider investing your intended down payment into real estate stocks and holding them for 15 years. After 15 years, that initial sum might grow tenfold, potentially allowing you to purchase a home with a single lump-sum payment.

Over the past decade, share prices for Daiwa House, Sekisui House, and Sumitomo Forestry have risen between 1.75 and roughly 3 times (excluding dividends). For instance, an investment of 10 million yen (2,100 shares) in Daiwa House would currently generate 369,000 yen in annual dividends. There may be no need to rush into buying a home.

It is best to grow your assets before spending them.

Japanese stocks currently have a negative earnings yield, indicating that they are undervalued.

・India: Continued Buying by Foreign Investors

Buying in the Indian stock market has centered on large-cap stocks, driving the NIFTY 50 and Sensex indices up by approximately 2.5%.

Data on outstanding loan balances in India for June has been released. Month-on-month growth rates for loan volumes were 0.38% for education loans, 0.79% for auto loans, and 1.03% for housing loans. Housing loans—which account for the largest share of outstanding debt—saw growth, reflecting the expansion of India’s housing market.