The wrong kind of ‘Thriller’: Japan’s market at 26-year low
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There are bear markets -- and then there is the Japanese market.
Tokyo’s Nikkei-225 share index today plunged 486.18 points, or 6.4%, to 7,162.90, its lowest close since October 1982.
That’s 26 years with no net gain in Japanese shares -- a track record that mocks the standard investment advice to just ‘hold on for the long term.’
As Bloomberg News noted: ‘The last time Japan’s Nikkei index was at today’s level, headbands and legwarmers were in, Steven Spielberg’s ‘E.T.’ topped box offices, and Michael Jackson’s ‘Thriller’ was about to be released.’
Asian markets were slammed again by deepening fears of global recession and financial-system turmoil. Hong Kong’s Hang Seng index dived 1,602.54 points, or 12.7%, to 11,015.84. The Singapore market dropped 8.3%; Taiwan’s market lost 4.6%.
In Tokyo, shares of banking firms Mitsubishi UFJ Financial Group and Mizuho Financial Group plummeted on concerns they may need government help to bolster their finances, or will need to issue new shares to raise capital.
Worries about Japan’s economy have been intensified by the soaring yen, which stands to make Japanese exports more expensive abroad. The yen has rallied dramatically in recent weeks, in part as spooked Japanese investors have brought money home from overseas.
In an unexpected statement today, the Group of 7 industrialized nations expressed concern about ‘excessive volatility’ in the yen. That was obviously intended as a warning that the group might intervene to weaken the Japanese currency.
But the yen strengthened to as much 91.90 per dollar overnight, and was trading at 93.26 at about 9:45 a.m. PDT, compared with 94.32 on Friday in New York. The exchange rate was 105.3 per dollar as recently as Oct. 3.
Measured from its recent high of 18,262 reached in July 2007, the Nikkei has lost nearly 61%. The U.S. Standard & Poor’s 500 index, by contrast, is down 44% from its record high reached a year ago. U.S. stocks were little changed at about 9:45 a.m., despite the destruction in Asian markets.
From Bloomberg News:
Japanese Prime Minister Taro Aso ordered officials to draft measures to help stabilize financial markets as early as today. Measures will include the purchase of shareholdings held by banks and stronger oversight of short-selling of stocks. ‘In this kind of market that’s moving without sensible reasons, only God knows what’s going to happen tomorrow,’ said Yoshinori Nagano, a Tokyo-based senior strategist at Daiwa Asset Management Co. ‘That’s why people are so scared of what’s ahead of them and sell whatever they have to avoid losses.’