Nomura's net profit for the second fiscal quarter fell by 6%, while revenue from stock trading reached a record high

According to the Zhitong Finance APP, Japan's largest brokerage and investment bank, Nomura, announced its latest performance report on Tuesday. The financial report shows that this Japanese financial giant unexpectedly saw a 6% decline in net profit for the second fiscal quarter ending in September, achieving a net profit of 92.1 billion yen (USD 610.82 million), compared to approximately 98.4 billion yen in the same period last year.

Although profits unexpectedly declined in the second fiscal quarter, some analysts believe that with Japan's new Prime Minister, Sanae Takaichi, preparing an economic stimulus policy that surpasses last year's scale (greater than 13.9 trillion yen), this could serve as a significant positive catalyst for the Japanese stock market. Therefore, for Japan's largest brokerage and investment bank, Nomura, it may usher in a new round of fundamental performance and valuation expansion. Benefiting from the surge in trading volume brought about by the Japanese stock market and global stock markets hitting new highs, investors are increasingly optimistic about Nomura's profit growth prospects, driving Nomura's ADR (NMR.US) to perform strongly in the U.S. stock market, with a year-to-date increase of 30%, significantly outperforming the S&P 500 index.

The financial report data shows that Nomura's wholesale business performed the strongest—achieving a year-on-year growth of 43% in the first half of the fiscal year, successfully supporting Nomura's net profit, mainly due to record revenues from stock trading, which aligns with the significant recovery in global stock market trading activities and IPO financing activities. This occurred after U.S. President Donald Trump announced a significant easing of reciprocal tariff policies in April, leading to a super bull market in global stock markets, with the Japanese stock market performing strongly, leading developed markets. Statistical data shows that the Nikkei 225 index has surpassed the 50,000-point mark, with a year-to-date increase of 25%, significantly outperforming the S&P 500 index and the Nasdaq 100 index in the U.S. stock market.

However, while Nomura's total asset management scale reached a new record of 101.2 trillion yen by the end of September, the pre-tax profit of Nomura's investment management division declined by 4% year-on-year, which also led to a year-on-year decline in Nomura's overall net profit.

As Japan's stock index reached a historical high, some high-net-worth investors chose to wait and see in the second fiscal quarter, resulting in a decline in overall sales for Nomura's wealth management division compared to the first fiscal quarter ending in April to June.

Nomura's latest performance mainly highlights the strong recovery of its wholesale business, which has been negatively impacted by market volatility for many years, but has achieved more sustained profits in recent quarters driven by the strong bull market in global stock markets.

It is understood that Nomura's wholesale business is mainly composed of two major segments: 1) Global Markets: providing market-making, sales, and trading closely related to fixed income and equity markets to large institutional clients, covering cash, derivatives, and structured financial trading products related to currencies, interest rates, and credit; 2) Investment Banking: providing merger and acquisition advisory (M&A), equity financing (ECM), debt financing (DCM), and various risk/solution services to corporate, financial institution, and public sector clients As the "investor wait-and-see period" triggered by U.S. President Donald Trump's tariff announcement comes to an end, the related impacts that previously suppressed large merger and acquisition transactions and IPO activities have significantly diminished, leading to a substantial increase in Nomura's investment banking advisory fees alongside the resurgence of transaction activities.

Nomura retains its top position in the 2025 merger and acquisition rankings related to the Japanese market. Major transactions in the quarter include private equity fund leader Blackstone privatizing engineering staffing company TechnoPro Holdings for approximately $3.5 billion.

Additionally, the proactive fiscal + industrial investment + a basket of policies aimed at pushing savings towards investment led by Prime Minister Sanna Takagi is significantly favorable for the Japanese stock market and particularly friendly to brokerage/asset management/investment banking, with Nomura being the largest player in these three sectors in Japan. As the Japanese stock market continues to experience a "super bull market" driven by expectations of Takagi's stimulative policies, the performance and transaction volume of Japanese brokerages/investment banks (such as stock brokerage, underwriting, and M&A advisory) are expected to continue to grow significantly, with equity financing and M&A activities likely to see a sustained recovery, leading to even greater profit growth potential in the future.

The 64-year-old Takagi is a conservative nationalist who cites former British Prime Minister Margaret Thatcher as one of her role models. She has long been an ally of Japan's longest-serving Prime Minister Shinzo Abe, who was assassinated, and a staunch follower of Abe's policies, which is why the current financial market is beginning to bet on the resurgence of "Abenomics."

The recent global phenomenon known as the "Sanae trade" refers to the financial market's expectations for the re-launch of "Abenomics" (which actively promotes an "ultra-loose fiscal framework" + a reserved and cautious stance on tightening monetary policy) following the victory of the new president of the Liberal Democratic Party, Sanae Takagi. This has led to significant fluctuations in the stock, bond, and foreign exchange markets; the "Sanae trade" is primarily reflected in the rapid surge of the Japanese stock market upon hearing the news, the continuous depreciation of the yen, and the restart of "yen carry trades." Therefore, the logic of betting on the "Sanae trade" is essentially equivalent to betting on a Japanese re-inflation combination of "stronger fiscal stimulus, industrial support, and moderate monetary policy"—going long on Japanese stocks, shorting the yen, and avoiding long durations