Japan Research Pack

But upticks tend to be shortIn this report, we look at share price reactions to recent FY16 full-year resultsannouncements. While the number of companies for which sufficient time has passedsince their results announcements is still small, the share prices of companies thatposted FY16 recurring profits above the pre-announcement Nomura forecast haveoutperformed the TOPIX by 1.9% in the three business days following their resultsannouncement. On the other hand, companies that undershot the Nomura forecasthave seen their share prices underperform by 0.6% over the equivalent time period(Figure 1). The same analysis conducted for actual results vs company forecastsproduced similar results (Figure 2, the somewhat contrarian move for stocks ofcompanies that fell short of their own forecasts is probably due to the small samplesize). In general, the deterioration in share price performance of companies whoseresults were worse than expected tends to be greater than the improvement in theperformance of stocks of companies that exceeded expectations. So far this resultsseason, many companies are reporting strong numbers, as we noted in our previousGlobal Research results update on 8 May (Update on FY16 results at Japanesecompanies). Our survey of share price reactions thus far indicates the market isresponding favorably to those strong numbers.