Skip to the navigation

Market Review: Japan

Another poor month in Japanese stock markets ended one of the worst quarterly periods in the last 20 years. The only bright spot was the strength of the Yen, which rose by nearly 5% against the U.S. Dollar, so mitigating the effect of the underlying share price declines. The large cap TOPIX index fell by more than 7% in Yen terms, but this was clipped to a loss of 3.6% when seen from a U.S. Dollar base. Similar effects were felt in the small cap area, where the Mothers Index fell 10.5% in Yen, and 6.6% in U.S. Dollars.

Investor sentiment remained negative throughout the period, as foreigners led a market exodus, selling down more than Yen 1 Trillion ($10 billion) of stocks, while domestic investors were reluctant buyers. The major influence on markets remains the international environment, with investor behavior determined more by what is happening on Wall Street than by what is going on at home.

The domestic economic news was soft, with manufacturing and capital expenditure statistics demonstrating particular softness. The news was not all bad, as exports to emerging markets continued to expand in the teeth of declining orders from the US. This is not surprising in view of the strength of the currency, and the relative resilience of markets like China. Land prices continued to rise, with double digit year on year price rises seen in the central Tokyo area.

Permanent Address: http://zephyrmanagement.com/reviews/japan1/

Back to Zephyr home

Legal disclosure | Privacy notice