< The 2014 All-Japan Research Team

Keiichi Ito
SMBC Nikko Securities
First-place appearances: 0

Total appearances: 2

Analyst debut: 2013

For a second year in a row, Keiichi Ito claims third place. From a quantitative point of view, the most important upcoming event is Prime Minister Shinzo Abe’s growth strategy to encourage private investment, the SMBC Nikko Securities analyst believes. The so-called third arrow in the prime minister’s fiscal plan is expected to be announced in June, and if it is successful in supporting corporate earnings growth, Ito contends, the market could see more upside earnings revisions and investors could regain confidence in earnings forecasts. Return on equity is another headline investment topic, he notes, boosted by the Government Pension Investment Fund’s potential use of the Tokyo Stock Exchange’s JPX-Nikkei Index 400 as the benchmark for its ¥128.6 trillion ($1.26 trillion) worth of assets. The new index selects companies based on return on equity, among other quantitative and qualitative criteria. “This is the first time for ROE to be focused on by investors,” the strategist says. “If the GPIF invests some assets in an ROE-focused index, investors would easily expect good performance of high-ROE stocks.” He recommends that his clients try to achieve alpha in this elevated-ROE universe by excluding stocks with very high price-to-book ratios and focusing on price momentum. Investors laud the quality of Ito’s research, which is “timely and well-written,” in the words of one money manager.