Japan retail investor index slumps in November

TOKYO (Reuters) - Japanese retail investors' confidence in domestic equities plunged in November as many suffered losses on their stock holdings and sought refuge in bank deposits, a Reuters survey showed on Friday.

Retail investors also see limited upside for the Japanese stock market, betting that the Nikkei share average .N225 will climb only 3 percent to 16,000 by the end of December and then to 16,850 by the end of March, 8.6 percent above Thursday's close.

Since the global stock sell-off in mid-August, the Tokyo market has struggled amid lingering concerns about fallout from the U.S. subprime mortgage crisis. The weak dollar has also cast a pall over Japan's export-led economic recovery.

The sentiment index in the Reuters monthly survey dropped from minus 22 in October to minus 48 in November, the lowest figure since the poll began in January 2006. The poll was conducted on 722 individual investors from November 19 to 21.

"Because of the strong yen and high oil prices, the outlook for corporate earnings looks murky," said a man in his 60s.

An investor in his 40s said: "Japan's external demand-led recovery could peak out as the construction boom in China ahead of the Beijing Olympics will slow down."

In the survey, 82 percent of respondents said their stock holdings were incurring losses but they hadn't changed their allocations, while 18 percent said they had sold their holdings.

On winter bonuses, which many private research firms forecast to fall for the first time since 2003, 29 percent of those surveyed said they won't allocate this money to stocks, while 50 percent said they would maintain their stance on stocks.

"I have decided to stick to the same investment style," said a woman in her 40s.

The survey found that investors grew risk-averse in the month, with the sentiment index for bank deposits rising to 24, the highest since the Reuters poll began last year. The sentiment reading for equity investment funds, on the other hand, fell to 26 in November from 33 a month earlier.

Most sectors fell out of favour and the only sectors retail investors were keen on included pharmaceuticals, health care and services.

The monthly poll aims to capture the views of readers of an online magazine (here) aimed at users of the Reuters Japan Web site (www.reuters.co.jp).