Nomura : Individual Investor Survey August 2016(PDF 340KB)

News Release

August 2016

12 August 2016

Global Research Division Nomura Securities Co., Ltd.

The Nomura Individual Investor Survey is a monthly survey conducted with the aim of better understanding investing activity by individuals and providing information on related trends.

1. Survey overview

2. Nomura I-View Index falls to 31.6 after one month of increase

   The Nomura Individual Investor Market View Index (Nomura I-View Index), based on respondents' three-month outlook for share prices and calculated by subtracting the percentage of responses for "fall" from that for "rise," was 31.6 in August 2016, down for the first time in two months. The Nikkei 225 reference level (1 August 2016 close) was 16,635.77, up 859.97 from the previous survey (4 July 2016 close of 15,775.80).

3. Investor focus rankings of "forex" and "domestic interest rates" rise, that of "international affairs" falls Respondents were asked to select the factor most likely to affect the stock market over the next three months. The response rate for "forex trends" rose 6.0ppt m-m to 36.7% and that for "domestic interest rates" increased 3.3ppt m-m. The response rate for "international affairs" declined 13.0ppt m-m to 36.5%.

4. Appeal of automobile and financial sectors rises, that of pharmaceutical sector and transportation and utilities sector falls

   Respondents were asked to choose one sector as an "appealing" investment target and one as "unappealing" over a timeframe of about three months. We then calculated a diffusion index (DI) for each sector by subtracting the percentage of responses for "unappealing" from that for "appealing." The DI for the automobile sector rose 8.6pt m-m to -4.7 and that for the financial sector increased 4.0pt m-m to -10.5, with the negative value shrinking in both cases. In contrast, the DI for the pharmaceutical sector declined 5.4pt m-m to 13.9, while that for the transportation and utilities sector fell 5.2pt to -2.8.

5. Rise in percentage of respondents expecting modest weakening of yen versus US dollar

   On the outlook for USD/JPY over the next three months, the combined percentage of respondents expecting the yen to depreciate against the US dollar was 56.9%, up 9.0ppt from the previous month. The response rate for "fall of about ¥5 against the dollar" rose 8.3ppt m-m to 44.0%, while that for "fall of about ¥10 against the dollar" increased 1.2ppt m-m. The response rate for "fall of more than ¥10 against the dollar" declined 0.5ppt m-m. The percentage of respondents expecting the yen to appreciate against the dollar, for all ranges of change, was 43.1%, down 9.0ppt from 52.1% in July. The response rate for "rise of about ¥5 against the dollar" dropped 2.8ppt to 36.5%, while the response rate for "rise of about ¥10 against the dollar" fell 4.4ppt and that for "rise of more than ¥10 against the dollar" declined 1.8ppt.

6. Investment appeal of euro and pound sterling improves

   On the outlook for different currencies over the next three months, we calculate a DI for each currency by subtracting the percentage of responses for "unappealing" from that for "appealing." This month the DI for the pound sterling rose 11.5pt to

   -12.8 and that for the euro improved 8.1pt to -10.4. In contrast, the DI for the yuan fell 7.8pt m-m, the first drop in six months.

7. Appeal of Japanese investment trusts and foreign equities among financial instruments rises

   To give an indication of plans for holding financial instruments, we calculate DIs for each type of financial instrument by subtracting the percentage of respondents planning to cease holding the instrument or decrease their holdings from the percentage planning to hold the instrument for the first time or increase their holdings. The DI for Japanese investment trusts rose 3.0pt m-m to 11.2, while that for foreign equities increased 3.1pt.

8. Lower percentage of respondents expect prices to fall one year out

   When asked for their outlook for prices of regularly purchased goods and services one year out, 22.1% of respondents selected one of the "fall" responses, down 4.7ppt from the previous month. The percentage of those selecting "no change" increased 3.1ppt to 47.6%, while the figure for those selecting one of the "rise" responses increased 1.6ppt m-m to 30.3%.

9. Use of margin trading and investment policies

10. For this month's spot question, we asked investors about their use of margin trading and their policies for margin investment. While 10.1% of respondents said they currently used margin trading, 72.2% said that they had never used margin trading and had no plans to do so. We asked respondents using margin trading (including those saying they had used margin trading in the past or would like to do so in the future) about their policies for valuation gains or losses on those positions. For valuation losses, the most common response was that the investor had set loss-cutting rules ahead of time and would liquidate holdings to cover those positions once the valuation loss rate reached a certain level. For valuation gains, the most common response was that the investor had set no particular policy and would make decisions based on the circumstances.

11. Survey results

12. Nomura I-View Index falls to 31.6 after one month of increase

    The Nomura Individual Investor Market View Index (Nomura I-View Index), based on respondents' three-month outlook for share prices and calculated by subtracting the percentage of responses for "fall" from that for "rise," was 31.6 in August 2016, down for the first time in two months. The Nikkei 225 reference level (1 August 2016 close) was 16,635.77, up 859.97 from the previous survey (4 July 2016 close of 15,775.80) (Figure 1).

    Fig. 1: The Nomura I-View Index and reference level of Nikkei 225 at time of survey

    (DI) 80

    70

    Nomura I-View Index (lhs) Past average for index (lhs)

    Nikkei 225 at time of survey (rhs)

    (¥) 22,000

    20,000

    60 18,000

    50 16,000

    40 14,000

    30 12,000

    20 10,000

    10 8,000

    0 6,000

    06/4 07/1 07/10 08/7 09/4 10/1 10/10 11/8 12/5 13/2 13/11 14/8 15/5 16/2 (yy/m)

    Note: (1) The Nomura I-View Index is based on data collected by this survey and expressed as a diffusion index (DI). The calculation method is as follows: ([(number of responses indicating expected rise in share prices in the next three months) minus (number of responses indicating expected fall in share prices in the next three months)] divided by number of respondents) x 100. The figure for January 2010 used here excludes those respondents who projected that the Nikkei 225 would be flat. (2) The Nomura I- View Index ranges from -100 to +100. The closer to +100, the more bullish the outlook held by individual investors. The closer to -100, the more bearish the outlook held by individual investors.

    The combined percentage of respondents expecting the Nikkei 225 to rise over the next three months was 65.8%, down 2.0ppt from the last survey (67.8%). The percentage of respondents expecting a "rise of at least 2,000 points" fell 4.8ppt m-m to 6.4%, while the percentage of those expecting a "rise of about 2,000 points" dropped 0.8ppt m-m to 15.0%. In constrast, the percentage of respondents expecting a "rise of about 1,000 points" increased 3.6ppt m-m, to 44.4% (Figure 2).

    Fig. 2: Outlook for Nikkei 225 during the next three months

    Rise of more than 2,000 points

    Rise of about 2,000 points

    Rise of about 1,000 points

    Fall of about 1,000 points

    Fall of about 2,000 points

    Jul 2016

    Fall of more than 2,000 points

    Aug 2016

    0 5 10 15 20 25 30 35 40 45 50

    (% of responses)

    Note: Respondents were asked to share their outlook for the Nikkei 225 over the next three months based on the 1 August 2016 close of 16,635. Respondents could choose one answer from six possible responses ranging from a rise of more than 2,000 points to a fall of more than 2,000 points, with 1,000-point increments in between.

13. Investor focus rankings of "forex" and "domestic interest rates" rise, that of "international affairs" falls Respondents were asked to select the factor most likely to affect the stock market over the next three months. The response rate for "forex trends" rose 6.0ppt m-m to 36.7% and that for "domestic interest rates" increased 3.3ppt m-m. The response rate for "international affairs" declined 13.0ppt m-m to 36.5% (Figure 3).

    Fig. 3: Impact of factors on the stock market

    Forex trends

    International affairs

    Domestic politics

    Domestic interest rates

    Domestic corporate earnings

    Market factors & psychological factors

    Weather & natural disasters

    Jul 2016

    Aug 2016

    0 10 20 30 40 50 60

    (% of responses)

    Note: Respondents were asked to choose one answer from seven possible responses concerning factors likely to impact the stock market over the next three months or so.

14. Appeal of automobile and financial sectors rises, that of pharmaceutical sector and transportation and utilities sector falls

    Respondents were asked to choose one sector as an "appealing" investment target and one as "unappealing" over a timeframe of about three months. We then calculated a diffusion index (DI) for each sector by subtracting the percentage of responses for "unappealing" from that for "appealing." The DI for the automobile sector rose 8.6pt m-m to -4.7 and that for the financial sector increased 4.0pt m-m to -10.5, with the negative value shrinking in both cases. In contrast, the DI for the pharmaceutical sector declined 5.4pt m-m to 13.9, while that for the transportation and utilities sector fell 5.2pt to -2.8 (Figures 4 and 5).

    Fig. 4: Investment appeal by sector

    Sector	DI	Breakdown of DI (% of responses)		(Ref) Previous DI
    		Appealing	Unappealing
    Pharmaceuticals	13.9	18.1	4.2	19.3
    Telecommunications	5.9	9.8	3.9	5.3
    Capital goods/other	5.8	11.9	6.1	6.1
    Consumer goods	1.7	15.3	13.6	2.9
    Transportation and utilities	-2.8	6.2	9.0	2.4
    Electrical equipment/precision equipment	-4.4	8.9	13.3	-5.7
    Automobiles	-4.7	9.1	13.8	-13.3
    Materials	-4.9	9.7	14.6	-2.5
    Financials	-10.5	11.0	21.5	-14.5

    Note: Respondents were given nine sectors and asked to choose one they viewed as an appealing investment target and one they viewed as unappealing. For each sector, we calculated a DI by subtracting the percentage of responses for "unappealing" from that for "appealing." The materials sector comprises mining, textiles, paper & pulp, chemicals, oil, ceramics, steel, nonferrous metals, and trading houses. The financial sector comprises banks, miscellaneous finance, securities, and insurance. The transportation and utilities sector comprises railroads & buses, trucking, shipping, airlines, warehousing, electric power, and gas. The consumer goods sector comprises marine products, food, retail, and services.

    Fig. 5: Trend in DIs for selected sectors

    (DI) 30

    20

    10

    0

    -10

    -20

    -30

    12/1

    12/3

    12/5

    12/7

    12/9

    12/11

    13/1

    13/3

    13/5

    13/7

    13/9

    13/11

    14/1

    14/3

    14/5

    14/7

    14/9

    14/11

    15/1

    15/3

    15/5

    15/7

    15/9

    15/11

    16/1

    16/3

    16/5

    16/7

    -40

    Automobiles Financials

    Capital goods/other

    Pharmaceuticals

    Electrical equipment/ precision equipment Materials

    Telecommunications Transportation and utilities Consumer goods

    (yy/m)

15. Most-watched stocks

    Respondents were asked to name one stock that they would like to have in their portfolio, irrespective of short- or long-term investment horizon (including stocks actually held) or that they found appealing. We show the most popular responses in Figure 6.

    Fig. 6: Name a stock with appeal (1,000 valid responses)

    Code	Company	No. of respondents
    7203	Toyota Motor	72
    9984	Softbank Group	35
    7974	Nintendo	34
    8267	Aeon	25
    6758	Sony	20
    4661	Oriental Land	19
    8411	Mizuho Financial Group	19
    8306	Mitsubishi UFJ Financial Group	16
    9202	ANA Holdings	16
    4502	Takeda Pharmaceutical	13
    4503	Astellas Pharma	12

    Code	Company	No. of respondents
    7201	Nissan Motor	11
    7751	Canon	11
    6752	Panasonic	9
    9437	NTT Docomo	9
    2327	NS Solutions	8
    2702	McDonald's Holdings (Japan)	8
    3938	Line	8
    3543	Komeda Holdings	7
    6501	Hitachi	7
    6902	Denso	7
    7267	Honda Motor	7
    8473	SBI Holdings	7

    Note: Not included in valid responses were answers of "none" or clearly mistaken responses.

16. Higher percentage of investors expect yen to depreciate against US dollar

    On the outlook for USD/JPY over the next three months, the combined percentage of respondents expecting the yen to depreciate against the US dollar was 56.9%, up 9.0ppt from the previous month. The response rate for "fall of about ¥5 against the dollar" rose 8.3ppt m-m to 44.0%, while that for "fall of about ¥10 against the dollar" increased 1.2ppt m-m. The response rate for "fall of more than ¥10 against the dollar" dropped 0.5ppt m-m. The percentage of respondents expecting the yen to appreciate against the dollar, for all ranges of change, was 43.1%, down 9.0ppt from 52.1% in July. The response rate for "rise of about ¥5 against the dollar" declined 2.8ppt to 36.5%, while the response rate for "rise of about ¥10 against the dollar" fell 4.4ppt and that for "rise of more than ¥10 against the dollar" dropped 1.8ppt (Figure 7).

    Fig. 7: Respondents' three-month outlook for USD/JPY

    Fall of more than ¥10 against the dollar

    Fall of about ¥10 against the dollar

    Fall of about ¥5 against the dollar

    Rise of about ¥5 against the dollar

    Rise of about ¥10 against the dollar

    Rise of more than ¥10 against the dollar

    Jul 2016

    Aug 2016

    0 5 10 15 20 25 30 35 40 45 50

    (% of responses)

    Note: Respondents were asked to share their outlook for USD/JPY over the next three months, referencing a 1 August 2016 indicative rate of 102.57. They could choose one answer from six possible responses ranging from a rise of more than ¥10 against the dollar to a fall of more than ¥10 against the dollar, with ¥5 increments in between.

17. Investment appeal of euro and pound sterling improves

    On the outlook for different currencies over the next three months, we calculate a DI for each currency by subtracting the percentage of responses for "unappealing" from that for "appealing." This month the DI for the pound sterling rose 11.5pt to

    -12.8 and that for the euro improved 8.1pt to -10.4. In contrast, the DI for the yuan fell 7.8pt m-m, the first drop in six months (Figures 8 and 9).

    Fig. 8: Investment appeal by currency

    Currency	DI	Breakdown of DI (% of responses)		(Ref) Previous DI
    		Appealing	Unappealing
    Japanese yen	32.7	39.2	6.5	37.6
    US dollar	26.9	32.9	6.0	25.0
    Australian dollar	11.4	13.3	1.9	13.1
    Canadian dollar	1.5	2.0	0.5	1.0
    Euro	-10.4	2.8	13.2	-18.5
    Pound sterling	-12.8	4.0	16.8	-24.3
    Brazilian real	-20.5	3.1	23.6	-13.0
    Chinese yuan	-30.4	0.9	31.3	-22.6

    Note: Respondents were given nine possible responses, consisting of the above eight currencies and "other," and asked to choose one they viewed as an appealing investment target and one they viewed as unappealing. Those selecting "other" were asked to specify a currency.

    Fig. 9: DIs for investment appeal of selected currencies

    (DI) 60

    40

    20

    0

    -20

    -40

    -60

    10/1

    10/4

    10/7

    10/10

    11/1

    11/4

    11/7

    11/10

    12/1

    12/4

    12/7

    12/10

    13/1

    13/4

    13/7

    13/10

    14/1

    14/4

    14/7

    14/10

    15/1

    15/4

    15/7

    15/10

    16/1

    16/4

    16/7

    -80

    (yy/m)

    USD JPY AUD CAD GBP EUR BRL CNY

18. Appeal of Japanese investment trusts and foreign equities among financial instruments rises

    To give an indication of plans for holding financial instruments, we calculate DIs for each type of financial instrument by subtracting the percentage of respondents planning to cease holding the instrument or decrease their holdings from the percentage planning to hold the instrument for the first time or increase their holdings. The DI for Japanese investment trusts rose 3.0pt m-m to 11.2, while that for foreign equities increased 3.1pt (Figures 10 and 11).

    Fig. 10: Financial instruments for which investors are planning either to increase or to decrease their holdings

    Financial instrument	DI	Breakdown of DI (% of responses)		(Ref) Previous DI
    		Plan to increase	Plan to decrease
    Japanese equities	34.1	48.7	14.6	34.6
    Cash & deposits	24.8	30.7	5.9	24.4
    Japanese investment trusts	11.2	17.5	6.3	8.2
    Foreign equities	11.0	11.7	0.7	7.9
    Gold	9.0	9.3	0.3	11.1
    Japanese bonds	6.3	8.1	1.8	5.1
    Foreign investment trusts	4.9	7.1	2.2	2.8
    Foreign bonds	3.2	4.2	1.0	2.8
    Hybrid securities	2.2	2.6	0.4	2.4
    Other	0.4	0.6	0.2	0.9
    None	-41.0	32.7	73.7	-40.6

    Note: Respondents were given a list of 11 responses and asked to choose those financial instruments for which they planned to increase their holdings and those for which they planned to decrease their holdings (multiple responses were allowed). "Plan to increase" refers to financial instruments that investors plan to hold for the first time or for which they plan to increase their holdings, while "plan to decrease" refers to instruments that investors plan to cease holding or for which they plan to decrease their holdings. Hybrid securities and gold were added to the list of choices from the February 2012 survey. Since the April 2013 survey, we have divided the former category of "Securities issued overseas" into foreign equities, foreign investment trusts, and foreign bonds.

    Fig. 11: DIs for financial instruments in which investors are planning either to increase or to decrease their holdings

    (DI)

    50

    45

    40

    Japanese equities

    35

    30 Cash & deposits

    25

    Securities issued

    overseas

    20

    15 Japanese investment

    trusts

    10

    Japanese bonds

    5

    0

    Note: "Securities issued overseas" is the total for foreign equities, foreign investment trusts, and foreign bonds.

    (yy/m)

19. Lower percentage of respondents expect prices to fall one year out

    When asked for their outlook for prices of regularly purchased goods and services one year out, 22.1% of respondents selected one of the "fall" responses, down 4.7ppt from the previous month. The percentage of those selecting "no change" increased 3.1ppt to 47.6%, while the figure for those selecting one of the "rise" responses increased 1.6ppt m-m to 30.3% (Figure 12).

    Fig. 12: Outlook for prices one year out

    Choices	% of responses	(Ref) Previous % of responses
    1	Fall of 5% or more	3.2	3.5
    2	Fall of 2% up to 5%	5.6	7.3
    3	Fall of less than 2%	13.3	16.0
    4	No change (0%)	47.6	44.5
    5	Rise of less than 2%	23.5	19.6
    6	Rise of 2% up to 5%	6.1	7.5
    7	Rise of 5% or more	0.7	1.6
    Total	100	100

    Note: Respondents were asked to select one response to the question: "How do you expect prices of regularly purchased goods and services to differ from current levels one year out?"

20. Use of margin trading and investment policies

21. For this month's spot question, we asked investors about their use of margin trading and their policies for margin investment. Some 10.1% of respondents said they currently used margin trading, while 8.7% said they had engaged in margin trading in the past and 9.0% said they would like to try margin trading in the future. At the same time, 72.2% said that they had never used margin trading and had no plans to do so (Figure 13).

    Fig. 13: Use of margin trading (1,000 responses)

    Choices	No. of responses	%
    1	Currently engaged in margin trading	101	10.1
    2	Not currently engaged in market trading but have used it in the past	87	8.7
    3	No experience with margin trading but would like to try it	90	9.0
    4	No experience with margin trading and no plans to try it (only engaged in cash trading)	722	72.2
    Total	1,000	100.0

    Note: Respondents were asked to select one of the above options to describe their experience with margin trading.

    We asked respondents who selected options 1 to 3 (278 respondents) about their policies regarding valuation gains or losses on these positions. For valuation losses, the most common response (30.6%) was that the respondents had set loss-cutting rules ahead of time and would liquidate holdings to cover those positions once the valuation loss rate reached a certain level. The second most common response (28.1%) was that the investor had set no particular policy and would make decisions based on the circumstances, while the third most common (23.7%) was that while they had no loss-cutting rules in place, they generally covered these positions before any additional margin would be required.

    Fig. 14: Policies for valuation losses in margin trading

    Choices	No. of responses	%
    1	Have set loss-cutting rules ahead of time to cover these positions once the valuation loss rate reaches a certain level	85	30.6
    2	Have no loss-cutting rules in place but generally cover positions before additional margin is required	66	23.7
    3	Cover positions when additional margin becomes necessary (without depositing additional margin)	29	10.4
    4	Deposit additional margin when necessary and wait for improvement as long as time and funds permit	20	7.2
    5	No particular policy, make decisions based on the circumstances	78	28.1
    Total	278	100.0

    Note: Respondents were asked to select one of the above options to describe their policies for valuation losses in margin trading.

    For valuation gains, the most common response (34.5%) was that the investor had set no particular policy and would make decisions based on the circumstances. The next most common response (33.8%) was generally to lock in profits for gains between 10% and 20%, while the third most common (18.3%) was to lock in profits for gains below 10% (Figure 15).

    Fig. 15: Policies for valuation gains in margin trading

    Choices	No. of responses	%
    1	Generally lock in profits of less than 10%	51	18.3
    2	Generally lock in profits between 10% and 20%	94	33.8
    3	Generally lock in profits between 20% and 30%	27	9.7
    4	Generally lock in profits of 30% or more	10	3.6
    5	No particular policy, make decisions based on the circumstances	96	34.5
    Total	278	100.0

    Note: Respondents were asked to select one of the above options to describe their policies for valuation gains in margin trading.

22. Nomura Individual Investor Survey

    With the aim of better understanding investing activity by individuals and providing information on those trends, Nomura Securities conducts a monthly survey-the Nomura Individual Investor Survey. The results of the survey have been published monthly since April 2006.

    Survey method: Questionnaire conducted electronically using the internet monitor questionnaire service administered by Nomura Investor Relations Co., Ltd.

    Survey target: Survey sent to 3,000 individual investors randomly selected from the approximately 24,000 with equity investment experience participating in Nomura Investor Relations' internet monitor questionnaire service.

    Number of responses: 1,000 (survey closed when 1,000 responses received).

    Survey period: Survey distributed on 1 August, with deadline for responses on 2 August.

    Survey content: Questions included each month are (1) share price outlook, (2) factors expected to impact the stock market,

    (3) attractive sectors and stocks, (4) USD/JPY outlook and attractive currencies, (5) financial instruments for which investors plan to change their holdings, and (6) inflation outlook (since July 2013). Respondents are also asked spot questions each month and queried about their personal profiles.

23. Nomura Individual Investor Survey (August 2016) respondents

24. Gender: Male (83.0%), female (17.0%)

    Age: Under 30 (0.9%), 30-39 (8.4%), 40-49 (27.1%), 50-59 (31.1%), 60 and above (32.5%)

    Occupation: Self-employed/fisheries, agriculture, forestry (8.5%), professional (physician/medical professional, lawyer, etc) (2.1%), company management/corporate officer (3.8%), company employee/public servant (47.4%), student (0.3%), full-time homemaker (7.1%), part-time worker/casual worker/job-hopper (5.8%), unemployed/pensioner (22.6%), other (2.4%)

    Region: Kanto (49.0%), Kinki (21.1%), Tokai/Koshinetsu/Hokuriku (14.6%), Hokkaido/Tohoku (5.6%), Chugoku/Shikoku/Kyushu

    (9.7%)

    Financial assets held: Less than ¥1,000,000 (6.3%), ¥1,000,000-¥2,999,999 (8.8%), ¥3,000,000-¥4,999,999 (13.6%),

    ¥5,000,000-¥9,999,999 (18.8%), ¥10,000,000-¥29,999,999 (27.6%), ¥30,000,000-¥49,999,999 (12.0%), ¥50,000,000 or more

    (12.9%)

    Value of domestic stocks held: Less than ¥500,000 (11.9%), ¥500,000-¥999,999 (10.5%), ¥1,000,000-¥2,999,999 (22.7%),

    ¥3,000,000-¥4,999,999 (17.2%), ¥5,000,000-¥9,999,999 (15.5%), ¥10,000,000-¥29,999,999 (15.3%), ¥30,000,000 or more

    (6.9%)

    Investment experience: Less than three years (5.1%), three years to less than five years (9.1%), five years to less than 10 years (22.0%), 10 years to less than 20 years (32.5%), 20 years or more (31.3%)

    Investment plan for domestic stocks: Mainly for long-term holding (43.7%), pursuit of gains from short-term appreciation (11.3%), pursuit of dividends and shareholder perks (27.2%), no particular plan (17.8%)

    Notice

    The next Nomura Individual Investor Survey (September 2016) is scheduled for release on Thursday, 15 September 2016.

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    Distribution of ratings (Global)

    The distribution of all ratings published by Nomura Global Equity Research is as follows:

    51% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 37% of companies with this rating are investment banking clients of the Nomura Group*.

    43% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 54% of companies with this rating are investment banking clients of the Nomura Group*.

    6% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 10% of companies with this rating are investment banking clients of the Nomura Group*.

    As at 30 June 2016. *The Nomura Group as defined in the Disclaimer section at the end of this report.

    Explanation of Nomura's equity research rating system in Europe, Middle East and Africa, US and Latin America, and Japan and Asia ex-Japan from 21 October 2013

    The rating system is a relative system, indicating expected performance against a specific benchmark identified for each individual stock, subject to limited management discretion. An analyst's target price is an assessment of the current intrinsic fair value of the stock based on an appropriate valuation methodology determined by the analyst. Valuation methodologies include, but are not limited to, discounted cash flow analysis, expected return on equity and multiple analysis. Analysts may also indicate expected absolute upside/downside relative to the stated target price, defined as (target price - current price)/current price.

    STOCKS

    A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the rating, target price and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as 'Not rated' or shown as 'No rating' are not in regular research coverage. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies. Benchmarks are as follows: United States/Europe/Asia ex- Japan: please see valuation methodologies for explanations of relevant benchmarks for stocks, which can be accessed at: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology; Japan: Russell/Nomura Large Cap.

    SECTORS

    A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months. Sectors that are labelled as 'Not rated' or shown as 'N/A' are not assigned ratings. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia. Japan/Asia ex-Japan: Sector ratings are not assigned.

    Explanation of Nomura's equity research rating system in Japan and Asia ex-Japan prior to 21 October 2013 STOCKS

    Stock recommendations are based on absolute valuation upside (downside), which is defined as (Target Price - Current Price) / Current Price, subject to limited management discretion. In most cases, the Target Price will equal the analyst's 12-month intrinsic valuation of the stock, based on an appropriate valuation methodology such as discounted cash flow, multiple analysis, etc. A 'Buy' recommendation indicates that potential upside is 15% or more. A 'Neutral' recommendation indicates that potential upside is less than 15% or downside is less than 5%. A 'Reduce' recommendation indicates that potential downside is 5% or more. A rating of 'Suspended' indicates that the rating and target price have been suspended temporarily to comply with applicable regulations and/or firm policies in certain circumstances including when Nomura is acting in an advisory capacity in a merger or strategic transaction involving the subject company. Securities and/or companies that are labelled

    as 'Not rated' or shown as 'No rating' are not in regular research coverage of the Nomura entity identified in the top banner. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies.

    SECTORS

    A 'Bullish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a positive absolute recommendation. A 'Neutral' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a neutral absolute recommendation. A 'Bearish' rating means most stocks in the sector have (or the weighted average recommendation of the stocks under coverage is) a negative absolute recommendation.

    Target Price

    A Target Price, if discussed, indicates the analyst's forecast for the share price with a 12-month time horizon, reflecting in part the analyst's estimates for the company's earnings. The achievement of any target price may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.

    Disclaimers

    This document contains material that has been prepared by the Nomura entity identified on page 1 and/or with the sole or joint contributions of one or more Nomura entities whose employees and their respective affiliations are also specified on page 1 or identified elsewhere in the document. The term "Nomura Group" used herein refers to Nomura Holdings, Inc. or any of its affiliates or subsidiaries and may refer to one or more Nomura Group companies including: Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura International plc ('NIplc'), UK; Nomura Securities International, Inc. ('NSI'), New York, US; Nomura International (Hong Kong) Ltd. ('NIHK'), Hong Kong; Nomura Financial Investment (Korea) Co., Ltd. ('NFIK'), Korea (Information on Nomura analysts registered with the Korea Financial Investment Association ('KOFIA') can be found on the KOFIA Intranet at http://dis.kofia.or.kr); Nomura Singapore Ltd. ('NSL'), Singapore (Registration number 197201440E, regulated by the Monetary Authority of Singapore); Nomura Australia Ltd. ('NAL'), Australia (ABN 48 003 032 513), regulated by the Australian Securities and Investment Commission ('ASIC') and holder of an Australian financial services licence number 246412; P.T. Nomura Indonesia ('PTNI'), Indonesia; Nomura Securities Malaysia Sdn. Bhd. ('NSM'), Malaysia; NIHK, Taipei Branch ('NITB'), Taiwan; Nomura Financial Advisory and Securities (India) Private Limited ('NFASL'), Mumbai, India (Registered Address: Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India; Tel: +91 22 4037 4037, Fax: +91 22 4037 4111; CIN No: U74140MH2007PTC169116, SEBI

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    Nomura Group, and/or its officers, directors and employees, may, to the extent permitted by applicable law and/or regulation, deal as principal, agent, or otherwise, or have long or short positions in, or buy or sell, the securities, commodities or instruments, or options or other derivative instruments based thereon, of issuers or securities mentioned herein. Nomura Group companies may also act as market maker or liquidity provider (within the meaning of applicable regulations in the UK) in the financial instruments of the issuer. Where the activity of market maker is carried out in accordance with the definition given to it by specific laws and regulations of the US or other jurisdictions, this will be separately disclosed within the specific issuer disclosures.

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    contained in one type of research product may differ from recommendations contained in other types of research product, whether as a result of differing time horizons, methodologies or otherwise. Nomura Group publishes research product in a number of different ways including the posting of product on Nomura Group portals and/or distribution directly to clients. Different groups of clients may receive different products and services from the research department depending on their individual requirements.

    Figures presented herein may refer to past performance or simulations based on past performance which are not reliable indicators of future performance. Where the information contains an indication of future performance, such forecasts may not be a reliable indicator of future performance. Moreover, simulations are based on models and simplifying assumptions which may oversimplify and not reflect the future distribution of returns.

    Certain securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derived from, the investment.

    With respect to Fixed Income Research: Recommendations fall into two categories: tactical, which typically last up to three months; or strategic, which typically last from 6-12 months. However, trade recommendations may be reviewed at any time as circumstances change. 'Stop loss' levels for trades are also provided; which, if hit, closes the trade recommendation automatically. Prices and yields shown in recommendations are taken at the time of submission for publication and are based on either indicative Bloomberg, Reuters or Nomura prices and yields at that time. The prices and yields shown are not necessarily those at which the trade recommendation can be implemented.

    The securities described herein may not have been registered under the US Securities Act of 1933 (the '1933 Act'), and, in such case, may not be offered or sold in the US or to US persons unless they have been registered under the 1933 Act, or except in compliance with an exemption from the registration requirements of the 1933 Act. Unless governing law permits otherwise, any transaction should be executed via a Nomura entity in your home jurisdiction.

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    Disclaimers required in Japan

    Credit ratings in the text that are marked with an asterisk (*) are issued by a rating agency not registered under Japan's Financial Instruments and Exchange Act ("Unregistered Ratings"). For details on Unregistered Ratings, please contact the Research Product Management Dept. of Nomura Securities Co., Ltd.

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    Japanese ETFs carry the risk of losses owing to fluctuations in the underlying indexes or other benchmarks.

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    In OTC transactions of credit default swaps (CDS), no sales commission will be charged. When entering into CDS transactions, the protection buyer will be required to pledge or entrust an agreed amount of margin collateral. In some of these cases, the transaction payments may exceed the amount of margin collateral. There shall be no advance notification of required collateral value or collateral ratios as they vary depending on the financial position of the protection buyer. CDS transactions carry the risk of losses owing to changes in the credit position of some or all of the referenced entities, and/or fluctuations of the interest rate market. The amount the protection buyer receives in the event that the CDS is triggered by a credit event may undercut the total amount of premiums that he/she has paid in the course of the transaction. Similarly, the amount the protection seller pays in the event of a credit event may exceed the total amount of premiums that he/she has received in the transaction. All other conditions being equal, the amount of premiums that the protection buyer pays and that received by the protection seller shall differ. In principle, CDS transactions will be limited to financial instruments business operators and qualified institutional investors.

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    Additional information regarding the methodologies or models used in the production of any investment recommendations contained within this document is available upon request by contacting the Research Analysts listed on the front page. Disclosures information is available upon request and disclosure information is available at the Nomura Disclosure web page: http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx

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