Fidelity International Analyzes Investor Behavior Amid High Market Volatility in Retail Investor Survey

· Even in highly volatile market environments, Japanese investors relatively maintain a long-term perspective.
· Investment behaviors diverge into 'continue', 'wait and see', and 'seek opportunities'.
· Expectations for the stock market remain dominant even under highly uncertain environments.
· Continued focus on Technology and AI as growth sectors.

Fidelity Toushin Co., Ltd. (President: Colby Penzone, Headquarters: Minato-ku, Tokyo, hereinafter 'Fidelity Toushin') has released partial results of the 'Be Invested Study' (* Retail Investor Survey) conducted by Fidelity International, targeting 13,000 retail investors in the Asia-Pacific region and Europe (including 1,000 in Japan). This announcement focuses on investors' behaviors in response to market volatility.

Divergence of Investment Behaviors in High Market Volatility Environments

One in five investors (20%) in the Asia-Pacific region stated that market volatility does not affect their investment behavior, indicating that they are not swayed by short-term price movements and are investing based on long-term strategies. In Japan, this percentage is even higher, with one in three (33%) stating they continue investing unaffected by market volatility. Furthermore, the percentage of investors who responded that they would immediately sell assets in sectors affected by volatility was 8% across the broader Asia-Pacific region and an even lower 5% in Japan, showing that investors who resort to short-term selling are in the minority.

On the other hand, a certain number of investors take a more cautious stance regarding market volatility. Overall, 25% responded that they 'temporarily halt investing and monitor the situation during periods of high market volatility', a trend particularly prominent in Hong Kong (35%), Taiwan (28%), and Japan (26%).

Additionally, it was found that a notable number of investors view market fluctuations as investment opportunities. In the Asia-Pacific region, 15% are actively considering investments in sectors and regions heavily impacted by volatility, and another 15% are considering allocating funds to other sectors they believe are less likely to be affected. In Japan, although the percentages are lower compared to the overall Asia-Pacific region, over 10% in each category (11% for the former, 12% for the latter) view market volatility as a favorable investment opportunity.

Question: What action do you take most often when the market changes significantly or when volatility is high? (Single choice)

These differences in investor behavior arise as the global environment becomes increasingly complex, with heightened short-term market uncertainty driven by geopolitical risks and supply constraints. Even under these circumstances, the percentage of investors who are optimistic about the stock market outlook for the next 12 months significantly outweighs those who are pessimistic. Globally, 55% responded optimistically and 15% pessimistically, while in Japan, 50% responded optimistically and 21% pessimistically.

Atsushi Kuroyanagi, Head of the Asset Building Research Department at Fidelity Toushin, commented as follows:

'A certain number of investors in the Asia-Pacific region are maintaining a long-term perspective and continuing to invest. This indicates an advancing understanding among investors that the stock market has the potential to reach new highs after going through a downturn.

On the other hand, in Japan, there is a unique characteristic not seen in other countries: high percentages of both people who continued investing and people who stopped altogether. This suggests that among Japanese investors, behavior during periods of high market volatility is increasingly polarizing.

Geopolitical developments, including those in the Middle East, are heightening short-term uncertainty through energy markets and inflation, but it is exactly at such times that it is crucial for investors to maintain a long-term perspective. Accurately timing market movements is extremely difficult, and continuing to invest even in uncertain phases increases the likelihood of reaping the benefits of eventual recovery phases and long-term growth.'

Home Bias Remains, Highlighting the Importance of Diversification

This survey revealed that in investor portfolios, the weighting of investments in domestic markets still tends to be high. Investors in the Asia-Pacific region allocate 61% of their portfolios to their domestic markets, surpassing global investors (56%) and European investors (52%).

In Japan, the allocation to the domestic market is the highest at 53%, followed by the US market at 22%. Furthermore, it was revealed that 44% of Japanese investors expect to increase their investment amounts in their domestic market over the next 12 months.

While such results reflect a high sense of familiarity and trust in the domestic market, they highlight issues in risk management...