Nikkei marks best year-end close since 1980s bubble

TOKYO, Dec.30 (Reuters) – The Nikkei stock average on Thursday posted its highest year-end closing level since the 1980s bubble era, despite small losses in thin trading before a four-day vacation.

The benchmark (.N225) slipped 0.40% to 28,791.71, with around 12 stocks falling for each one that rose. The wider Topix (.TOPX) lost 0.33% to 1,992.33, but also marked the best year-end close since 1989, after rallying 10.4% this year.

The Nikkei has advanced 4.9% this year, buoyed by fiscal and monetary stimulus as well as optimism for a post-pandemic economic recovery that has raised stocks to world records this year.

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“The backdrop for equities looks good next year,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, predicting that the Nikkei will surpass 30,000 by the end of March.

“Omicron looks like it won’t come as a major shock to the markets (and) investors don’t seem concerned about the prospect of two or three Federal Reserve rate hikes next year.”

The Nikkei hit its highest level of 2021 in September at 30,795.78, a first since 1990, the year of the stock market crash that ushered in a “lost decade”, a banking crisis and years of deflation and weak demand. from which Japan has yet to recover.

“During the bubble, price-to-earnings ratios were very high, but the Nikkei isn’t that expensive now, so a breakout of 30,000 is no cause for concern,” Ichikawa said.

In 1990, the market was trading at around 50 times expected earnings, compared to around 15.5 times now.

None of the large-cap Japanese banks of the 1990s exist today, as they subsequently suffered massive loan losses and repeated mergers to survive. Today, the market is dominated by Toyota Motor (7203.T), followed by SoftBank Group (9984.T).

“It is true that Japanese stocks were pulled higher by foreign markets, but strong earnings of Japanese companies were also a big driver,” said Takuya Yamada, senior manager of the investment management department of PayPay Asset. Management.

On Thursday, however, all Nikkei sectors were down. Store operator Uniqlo Fast Retailing (9983.T) was the biggest drag, slipping 0.55%, while Nintendo (7974.T) fell 2.03% and sauce maker Kikkoman (2801 .T) lost 2.13%.

SoftBank Group was the biggest gainer in index points on Thursday, up 1.46%. The biggest percentage gain was Z Holdings (4689.T), formerly known as Yahoo Japan, which rose 3.33%.

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Reporting by Kevin Buckland; Additional reports by Tokyo Markets Team; Editing by Devika Syamnath

Our Standards: Thomson Reuters Trust Principles.

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