Tokyo: The Nikkei average ended 2007 with a loss for the year of 11% on Friday, its first fall in five years and making Tokyo the world’s worst-performing major stock market.
The market reached its high for the year in February but was overshadowed by booming markets and vibrant economies elsewhere in Asia and in recent months has been dogged by the US subprime problems and resultant credit crunch.
The year’s final trading day in Friday saw exporters such as Canon Inc among the main drags on the market, with investors discouraged by a firmer yen and worries about the subprime issues and the US economy’s outlook.
“The market ended as if to symbolize the year’s trade — subprime,” said Hitoshi Yamamoto, chief executive officer at Fortis Asset Management Japan.
“This looks like a warning by the market that the subprime problem will continue into the new year and won’t be solved easily.”
Tokyo stocks also fell out of favour because foreign investors were disappointed by Japanese firms’ mindset such as a willingness to adopt anti-takeover measures and the government’s slowness in implementing structural reforms, Yamamoto said.
In 2006 the benchmark Nikkei gained 6.9%, boosted by expectations of mergers and acquisitions among Japanese firms.
It finished Friday’s half-day session down 1.7% or 256.91 points at 15,307.78.
The broader TOPIX index ended Friday down 1.6% or 24.26 points at 1,475.68, booking a decline of 12.2% for the year — also the first drop in five years.
Start-up markets fared worse. The small-cap Jasdaq market finished the year down 18.6% while the Mothers market for start-ups lost nearly 30% and the Hercules Index shed 34.6%.
In contrast, Hong Kong’s Hang Seng Index rose about 40%, while the US Standard & Poor’s 500 gained 4% and the pan-European FTSEurofirst 300 added about 2%.
The Tokyo market is closed until 4 January, when it will start 2008 with a half-day of trade. Full trade resumes on 7 January.