Japan’s Nikkei crosses 30,000 level after over three decades
TOKYO: Japan’s Nikkei share average rose above the 30,000 level for the first time in more than 30 years on Monday, as it regained the ground lost during decades of economic stagnation.
Japanese stocks have capitalised on an anticipated global rebound from the COVID-19 pandemic this year, with the abundance of cyclical shares, such as electronic parts makers, atracting global investors.
The break of 30,000 could open the way for test of all-time high of 38,957, touched at the end of 1989.
The Nikkei’s epic downfall since then even dwarfed the Wall Street’s worst bear market ater the Great Depression. The Dow Jones Industrial Average took 25 years to recover to its previous peak.
Japan’s economy expanded more than expected in the fourth quarter, extending the recovery from its worst postwar recession thanks to a rebound in overseas demand that boosted exports and capital spending.
But the recovery slowed from the third quarter’s brisk pace and new state of emergency curbs cloud the outlook, underscoring the challenge policymakers face in preventing the spread of COVID-19 without choking off a fragile recovery, especially in the batered consumer sector.
“Conditions are such that Japan will not be able to avoid negative growth in the first quarter,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research.
“There is a high possibility that there will be a repeating cycle of coronavirus infections spreading and being contained this year, which means that consumption is not likely to recover at the expected pace.”
The world’s third-largest economy grew an annualised 12.7 per cent in October-december, government data showed on Monday, exceeding a median market forecast for a 9.5 per cent gain.
It was slower than the revised 22.7 per cent surge in the previous quarter, when the economy got a lit from pent-up demand ater a previous state of emergency was lited in May.
For the full coronavirus-stricken year, Japan’s economy contracted 4.8 per cent, the first annual fall since 2009.
But Japan’s October-december performance was stronger than US growth of 4 per cent and a 2.8 per cent slump in the eurozone. With two straight quarters of solid growth, Japan’s economy likely recouped 90 per cent of pandemic-induced losses, analysts say.
“Japan’s recovery proceeded at a much faster pace than initially expected,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“There’s still some distance toward a full normalisation, but economic activity is recovering toward pre-pandemic levels.”
None of the Japanese banks that topped the list of companies with biggest market capitalisation in 1990 exist now, as they subsequently suffered massive loan losses and repeated mergers to survive.
Tokyo Electric Power Co, the biggest firm outside banks back then, became irrelevant for investment in 2011 ater the Fukushima nuclear plant disaster.