Winners and losers in Japan’s 2020 stock market

TOKYO: More time at home, reduced mobility and billionaire Masayoshi Son helped drive stocks in Japan in 2020, as the coronavirus pandemic became the dominating force separating winners from losers.

While the stay-at-home trend boosted game makers and online retailers including Nexon Co and Mercari Inc, heightened health concerns saw drugmakers and medical-care innovators such as M3 Inc also feature among the biggest gainers.

At the other end of this teeter-totter were companies that thrive on domestic movement and foreign tourism: stocks tied to oil and autos, railways and airlines, as well as brick-and-mortar retailers.

Looking ahead, Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management Co, expects “further polarisation” among companies as Japan makes a strong recovery in 2021.

Demand for games, e-commerce, online medical care and work-from-home technology is unlikely to fade even after the pandemic is under control, he wrote in a note this month.

SMBC Nikko Securities Inc expects a rotation following earnings reports in February, with value “taking the upper hand” from growth as restrictions on activity are eased and the economic recovery broadens.

The broker sees de-carbonisation, digitisation and business consolidation as the key themes.

“Export sectors, led by manufacturing, are already seeing a clear cyclical recovery, and there are many names with high-quality environmental technologies, ” Masashi Akutsu, chief equity strategist at SMBC Nikko, wrote in a Dec 16 report.

He sees exporters remaining better positioned in the first half of 2021, with domestic-focused sectors lagging.

Here’s a look at some of the most significant Japanese stock moves in 2020.

Winners: M3 Inc. (+195%)The top performer on the Nikkei 225 this year, M3 rode a wave of investor interest in online heath services, such as the company’s virtual drug-marketing platform and telemedicine tie-up with Line Corp.

The same theme drove gains of more than 500% in Carenet Inc, making it the sixth biggest gainer on the Mothers index of startups, as well as a jump of over 340% in Medpeer Inc, which ranked No 3 on Topix.

Nexon Co (+119%)

Demand for videogames among people stuck at home helped shares of Nexon, Koei Tecmo Holdings Co and Capcom Co more than double this year.

Among the console makers, Nintendo Co jumped 50% and Sony Corp climbed 39%. Nexon benefited from particularly strong growth in South Korea and high expectations for its Dungeon & Fighter game in China, as well as its surprise addition to the Nikkei 225.

Mercari Inc (+105%)Virtual flea-market operator Mercari is the largest stock on the Mothers Index and its surge accounted for about 20% of this year’s gain in the startup gauge.

The e-commerce boom lifted a broad spectrum of players, from SoftBank affiliate Z Holdings Corp (+35%) to online shop creation and payments firm Base Inc (+456%) and food delivery website operator Demae-Can Co (+179%).

CyberAgent Inc (+86%)CyberAgent was another beneficiary of the stay-at-home trend, with the market impressed by subscriber and revenue growth at its Abema video-streaming service, even though it has yet to contribute to earnings.

The company also has a profitable game operation, and its internet advertising business is recovering from the Covid-19 hit earlier in the year.

SoftBank Group Corp (+69%)Masayoshi Son’s tech conglomerate surged on a plan to sell about US$43bil in assets to buy back shares and pay down debt, with the company unloading chipmaker Arm and paring its stakes in Alibaba Group Holding Ltd, T-Mobile US Inc and its domestic telecom unit SoftBank Corp.

In addition to ongoing share repurchases, which have spurred speculation over whether Son is looking to take the company private, continued valuation gains and IPOs from the SoftBank Vision Fund portfolio may continue to drive the stock.

Chugai Pharmaceutical Co (+64%), Daiichi Sankyo Co (+47%)

Chugai, a unit of Swiss drug giant Roche Holding AG, has received attention for testing of its Actemra arthritis remedy as a treatment for Covid-19, as well as growth in sales of its hemophilia drug Hemlibra.

Daiichi Sankyo forged its second big cancer drug deal with AstraZeneca Plc this year and was also selected as a Japanese supplier for the British drugmaker’s coronavirus vaccine.

Losers: Mitsui E&S Holdings Co (-61%), Inpex Corp (-51%), JGC Holdings Corp (-45%)The dent in demand for oil due to the coronavirus was the culprit behind the huge losses in three of the Nikkei 225’s worst performers of 2020.

The more than 20% decline in oil prices hurt profits at energy explorer Inpex, while Mitsui E&S and JGC suffered from delays in energy-related projects due to the virus.

Mitsubishi Motors Corp (-53%)

While Covid-19 hurt car sales all over, no Japanese automaker saw its stock slide more than Mitsubishi Motors. The company has been struggling with losses amid high costs and slumping sales.

A report that Nissan Motor Co was considering selling some or all of its 34% stake was the latest blow to a firm already reeling from trouble in the companies’ three-way alliance with Renault SA since the arrest of Carlos Ghosn.

Nikon Corp (-52%)The dent to tourism and travel plans as well as cancellations of sporting and other events crushed demand for cameras, and Nikon tumbled the most among the big Japan brands.

Citizen Watch Co (-51%)Citizen Watch dropped as lockdowns halted duty-free and other travel-related sales in addition to shuttering retail stores in North America, a key market for its timepieces. A similar slide was seen in smaller rival Seiko Holdings Corp (-55%), while Casio Computer Co (-14%) was less scathed as sales of G-Shock watches climbed in China. — Bloomberg

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