Japan’s Topix index likely lower within the next six months: Goldman Sachs

According to Goldman Sachs Group Inc.’s chief Japan strategist Kathy Matsui, the Japanese equities are poised for declines in the second half of this year as political uncertainty drives investors to book profits after the Topix Index hit a 22-month high, Bloomberg reports.

Key Points:

Slower Chinese growth and a more hawkish Federal Reserve will also weigh on shares listed in Tokyo

Key risks for Goldman:

Prime Minister Shinzo Abe is losing support in polls and may reshuffle his cabinet in August or September to bolster his ratings

Volume of share buybacks is falling, down 40% year-on-year

Trust banks have become net sellers of stocks

Next step on Bank of Japan exchange-traded fund buying likely to be a reassessment to shrink the purchases

Goldman’s target levels for the Topix and Nikkei 225 Stock Average:

Topix three/six/12 months forecasts -- 1,600/1,575/1,700

Previously 1,550, 1,600, 1,650

Nikkei 225 three/six/12 months estimates -- 20,000/19,700/21,250