Nomura to Change Stock Rating System in Asia, Japan From Oct. 21

Nomura Holdings Inc. (8604), Japan’s biggest brokerage, will change the system used to rate more than 560 stocks in its home market and Asia to focus on forecasts for performance relative to benchmark indexes.

Nomura plans to switch on Oct. 21 from its previous method of rating equities based on predictions for absolute share-price gains and losses over the next 12 months, according to a report from the brokerage dated yesterday. The brokerage will use the Russell/Nomura Large Cap Index, excluding dividends, as its benchmark in Japan, the report showed.

The securities firm will rate a company ‘buy’ should the analyst expect the stock to beat the benchmark gauge over the next 12 months. Under Nomura’s old approach, that label meant that the analyst’s 12-month target price was 15 percent or more above the current value. A ‘reduce’ rating now means the stock may trail the measure, compared with the previous system where it implied a prediction for a decline of at least 5 percent.

Japan’s Topix index surged 62 percent in the 12 months through yesterday, the biggest gain among developed markets. Of the gauge’s 1,744 members, more than 80 percent of them climbed at least 15 percent in the same period, according to data compiled by Bloomberg.

Nomura’s change brings its Asian stock rating approach in line with the system the brokerage uses in the Americas and Europe, Middle and Africa, according to the report.

To contact the reporters on this story: Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net; Anna Kitanaka in Tokyo at akitanaka@bloomberg.net

To contact the editor responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net

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