Strategists cut Nikkei forecasts, see no upside this year: Reuters poll

By Hideyuki Sano

TOKYO (Reuters) - Japanese stock prices will likely remain well below pre-coronavirus pandemic peaks until at least the end of next year, a Reuters poll showed on Thursday.

The median estimate of 23 analysts and fund managers polled May 12-26 put the Nikkei benchmark <.N225> at 21,000 at the end of 2020.

That would be 2.0% below the index's Wednesday close of 21,419.23 and almost 15% below a February Reuters poll that forecast the year-end index at 24,650.

The median forecast in the May poll keeps the index at 21,000 through to the end of June next year before it rises to 22,050 by the end of 2021. That is still well below a peak of 24,116 before the pandemic.

Uncertainty generated by the pandemic resulted in a wide range of 2020 end-year forecasts, from 16,000 to 28,000.

"If there is a second wave of infections, markets could falter again but our basic scenario is a sustained rally in share prices," said Hiroshi Watanabe, senior economist at Sony Financial.

The Nikkei has been recovering after a more than 32% slide from a peak in January to as low as 16,358 in March, a trough last seen in November 2016.

The Japanese government this week lifted a state of emergency imposed to stop the spread of COVID-19 as the rate of new infections has fallen, allowing for a gradual recovery of economic activity. The domestic economy is expected to contract nearly 6% this financial year, almost as much as it did in 2009. [ECILT/JP]

Hisashi Iwama, senior portfolio manager at Asset Management One, said he could not rule out the Nikkei testing its March low.

"If we have not found effective treatments for the novel coronavirus, in the autumn and winter, we could see the second wave of coronavirus as well as regular flu, causing chaos in hospitals and re-introduction of social restrictions," he said.

(Reporting by Hideyuki Sano and Eimi Yamamitsu; additional polling by Mumal Rathore, Khushboo Mittal and Sumanto Mondal in Bengaluru; editing by Jane Wardell)