Japan’s largest brokerage firm, Nomura Holdings, is expanding its currency exchange and emerging markets trading operations throughout Asia as company executives predict ongoing market turbulence will boost client activity.
The financial services giant also anticipates that the positive market environment which pushed global stock markets to record levels will return once geopolitical conflicts subside and elevated oil prices decline.
“Our macro businesses tend to perform well in periods of volatility. So that has been a big theme for us and probably is going to continue being one of our main focus areas,” Rig Karkhanis, Nomura’s head of global markets, told Reuters during an interview this week.
The macro division includes interest rate, currency, and emerging market trading services that help clients diversify and adjust their investment portfolios.
While Karkhanis anticipates extended market volatility, he believes the generally positive stock market environment will continue for another two years, fueled by massive artificial intelligence infrastructure investments that will enhance productivity and economic growth.
“My base case is we’ll see a normalisation of geopolitical risk. Oil price volatility is likely a short-term phenomenon and we should go back to where we were two or three months ago,” he explained.
This latest hiring initiative continues Nomura’s market division recovery efforts as the company works to establish itself as a global competitor while maintaining profitability across various market conditions.
Karkhanis revealed that Nomura is also recruiting for its U.S. interest rates division under Moritz Westhoff, who became the new head of U.S. rates in August. However, he refused to disclose the exact number of positions being filled.
The company previously strengthened its spread products division—mainly credit trading—approximately two and a half years ago when global interest rate cuts began, and enhanced its equity trading operations about a year ago, betting on rising stock markets.
Market volatility over the past year has significantly benefited Nomura’s trading income, which reached 716 billion yen ($4.5 billion) during the first nine months of the fiscal year ending in March.
“Next year I think it’ll be another very strong year,” Karkhanis predicted.
Regarding Japanese government bonds, Karkhanis expects reduced geopolitical tensions to lower yields on long-term Japanese debt securities.
International asset managers are increasingly investing in these bonds, especially longer-term securities with yields comparable to similar European bonds, according to Karkhanis. Additional purchases by domestic asset managers could drive long-term Japanese government bond yields even lower.
The industry faces difficulty finding traders experienced with Japanese government bond yields at levels not witnessed since Japan’s economic bubble period of the 1980s and early 1990s.
“We would love to hire more JGB traders,” Karkhanis stated. “Japan rates traders are probably the most in demand globally, so it’s highly competitive.”
