Market views· Sector Analyst
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The Japanese market exhibits distinct risk-off sentiment, with defensive sectors significantly outperforming cyclical sectors relative to the benchmark. The average relative strength (RS) of defensive sectors stands at +8.94%, compared to +1.66% for cyclical sectors, resulting in a spread of -7.28%. While overall sector momentum is accelerating, capital is primarily flowing into defensive sectors such as Real Estate, Pharmaceuticals, and Transportation. Conversely, major cyclical sectors including Steel/Non-ferrous Metals, Electronics, and Machinery are experiencing sharp declines, reflecting the market's cautious stance.
Action: In the current market environment, overweight defensive sectors and underweight underperforming cyclical sectors to ensure portfolio stability.
| # | Type | |||||
|---|---|---|---|---|---|---|
| 1 | Real Estate 1633.T | DEF | +14.25% | +18.77% | +2.88% | +16.91 |
| 2 | Retail 1630.T | CYC | +13.91% | +16.42% | +10.84% | +13.19 |
| 3 | Pharmaceutical 1621.T | DEF | +13.37% | +22.35% | +10.24% | +10.66 |
| 4 | Transportation 1628.T | DEF | +12.84% | +20.06% | +11.34% | +16.62 |
| 5 | Automobile 1622.T | CYC | +11.72% | +17.74% | +12.88% | +10.78 |
| 6 | Electric Power/Gas 1627.T | DEF | +10.90% | +19.11% | +6.00% | +21.76 |
| 7 | Trading/Wholesale 1629.T | CYC | +10.15% | +18.12% | +2.10% | +14.87 |
| 8 | Financials ex-Banks 1632.T | DEF | +8.96% | +15.68% | +8.77% | +13.70 |
| 9 | Construction 1619.T | DEF | +7.32% | +5.65% | −6.81% | +11.41 |
| 10 | Banks 1631.T | DEF | +5.87% | +5.68% | +10.51% | +14.85 |
| 11 | Chemicals 1620.T | DEF | +5.39% | +8.48% | +0.13% | +2.46 |
| 12 | IT/Services 1626.T | CYC | +2.87% | +10.01% | +15.44% | +3.43 |
| 13 | Foods 1617.T | DEF | +1.59% | +6.11% | +1.54% | +0.01 |
| 14 | Energy Resources 1618.T | CYC | −1.30% | +7.07% | −8.62% | +6.55 |
| 15 | Machinery 1624.T | CYC | −4.45% | −7.67% | −16.83% | −3.43 |
| 16 | Electronics 1625.T | CYC | −5.75% | −6.90% | −4.70% | −8.38 |
| 17 | Steel/Nonferrous 1623.T | CYC | −13.90% | −19.08% | −29.21% | −7.32 |
Leading the defensive rotation with strong relative strength and momentum.
Stable performance is expected due to lower sensitivity to economic fluctuations and consistent relative strength.
Well-suited to the current market environment, combining high momentum with defensive characteristics.
Further weakness is anticipated given the largest decline in relative strength and negative momentum.
Represents the weakness in cyclical sectors due to poor relative strength and negative momentum.
Investment appeal is low as both relative strength and momentum show negative trends.
The Real Estate sector demonstrates the strongest relative strength against the benchmark, recording a 20-day RS of +14.25% and momentum of +16.91. This clearly illustrates the trend of capital inflows into defensive sectors.
Despite being a cyclical sector, the Retail sector ranks among the top performers with a 20-day RS of +13.91%, indicating robust performance. This suggests support from specific domestic consumption-related factors.
The pharmaceutical sector is consistently outperforming the benchmark, driven by strong defensive characteristics with a 20-day RS of +13.37% and momentum of +10.66. It is emerging as a stable investment destination amid concerns over economic slowdown.
The electronics sector is underperforming the benchmark, recording a 20-day RS decline of -5.75% and momentum of -8.38. This reflects deteriorating investor sentiment toward export-oriented cyclical sectors.
The steel/non-ferrous metals sector is ranking at the bottom, with a sharp 20-day RS drop of -13.90% and momentum of -7.32. It exhibits the most severe weakness among cyclical sectors, indicating strong risk-averse sentiment.
The market is exhibiting a clear rotation from cyclical sectors to defensive sectors.
The average relative strength (RS) of defensive sectors stands at +8.94%, significantly higher than the +1.66% average for cyclical sectors. This -7.28% spread indicates a 'risk_off' bias, suggesting investors are shifting capital into stable sectors in anticipation of an economic slowdown. Notably, the 20-day RS for the Steel/Non-ferrous Metals sector plunged -13.90%, reinforcing this trend.
Key driver: Heightened risk aversion among investors due to concerns over an economic slowdown is the primary driver.
Sector ETF prices relative to Nikkei 225 from AlphaLenz's daily price database, 14 Nov 2026.