Japanese, Swiss and Brazilian Stock Investors Grow More Bullish

By Darren Boey
May 14 (Bloomberg) -- Japanese, Swiss and Brazilian stocks may rise in the next six months, and investors in most of the rest of the world's biggest markets are growing less convinced equities will fall, a survey of Bloomberg users showed.
Japan's Nikkei 225 Stock Average, the Swiss Market Index and Brazil's Bovespa Index will gain, according to the Bloomberg Professional Global Confidence Survey. Fewer investors expect declines in the Standard & Poor's 500 Index, the U.K.'s FTSE 100 Index, Germany's DAX Index and Spain's IBEX 35 Index than in April, according to the poll of 3,447 users in 10 markets from Tokyo to Zurich to New York. Only in Hong Kong, France and Italy did investors grow more bearish.
The MSCI World Index rebounded 11 percent from a 17-month low on March 17, and two-thirds of companies in the S&P 500 reported first-quarter earnings that beat estimates, according to data compiled by Bloomberg. Fast Retailing Co., Japan's biggest clothing retailer, raised its earnings forecast for the year ending Aug. 31. Novartis AG, Switzerland's second-largest drugmaker, posted first-quarter profit that exceeded analysts' estimates. S&P raised Brazil's credit rating to investment grade, sending the Bovespa to a record.
``Sentiment globally is picking up,'' said Lawrence Peterman, investment director at Eden Financial Ltd. in London, who participated in the survey. ``The largest part of the bad news may be with us already, especially with the financials, so it adds to the feeling that we may have seen the worst.''
Stock investors became more bullish as the Federal Reserve provided additional cash to banks, gave credit to primary dealers of government securities and signaled it has cut interest rates enough to spur economic growth.
Japan's Rally
The Bloomberg stock confidence index climbed to 51.1 in Japan this month from 46.8 in April. Readings above 50 indicate that more users expect stocks in their country to rise than to decline in the next six months.
The dollar's 8.1 percent increase against the yen from a 12-year low March 17 boosted the profit outlook for Japanese exporters. A stronger dollar increases the amount of U.S. revenue when converted to yen.
The Nikkei jumped 20 percent since March 17, when it was valued at 13.4 times earnings, the lowest since at least April 2000, according to data compiled by Bloomberg. Yamaguchi City, Japan-based Fast Retailing raised its full-year profit forecast last month after March sales surged.
``Japan's stock market will remain robust,'' said Hideyuki Ookoshi, who helps oversee the equivalent of $365 million at Chiba-Gin Asset Management Co. in Tokyo. As lower interest rates ``help prevent the U.S. economy and stock market from worsening rapidly, the dollar is very likely to stay strong against the yen, which helps Japanese businesses,'' Ookoshi said.
Biggest Gains
Investors in Brazil, Switzerland and the U.K. recorded the biggest gains in sentiment over the past month, according to the survey. The stock confidence index for Brazil jumped to 82.5 from 66.8. The Swiss index rose to 52.9 from 44.7, while the U.K. climbed to 31.4 from 26.4.
Bloomberg users were most bullish on Brazil's benchmark stock index, after S&P on April 30 raised the country's long- term foreign currency debt rating to BBB- from BB+. Brazil, whose economy grew last year at the fastest pace since 2004, should be able to maintain annual growth of as much as 4.5 percent, the rating company said.
Higher commodities prices also helped lift shares of the nation's metals, oil and sugar producers and send the Bovespa 10 percent higher this year.
Novartis, ABB
Investors in Switzerland predicted gains for the first time this year after Basel-based Novartis and Zurich-based ABB Ltd., the world's largest builder of electricity networks, reported profit that beat analyst estimates. The Swiss Market Index climbed 12 percent since March 17.
The U.K.'s increase left Spanish investors the most pessimistic in the May 5 to May 9 survey, even as sentiment climbed to 29.3 from 28.3. The confidence gauge fell the most among the 10 markets in Italy, dropping to 42.7 from 48.7.
In the U.S., the stock confidence index rose to 35.8 from 34.6 in April. The S&P 500 has climbed 10 percent from a 19- month low on March 10 as companies from Peoria, Illinois-based Caterpillar Inc. to Mountain View, California-based Google Inc. reported profit that beat analysts' estimates. Europe's Dow Jones Stoxx 600 Index has gained 12 percent from its 2008 low and the MSCI Asia Pacific Index has advanced 13 percent.
``People are definitely starting to feel better about the U.S. market,'' said Doug Peta, a market strategist at J&W Seligman & Co. in New York, which oversees $19 billion. ``Earnings were pretty good. But I don't think it's off to the races. There's still work to do.''