Burned by the bubble: Japan investors risk missing out on bargains
Nikkei -- Dec 29
Even after the 1929 U.S. stock market crash, which triggered the Great Depression, share prices regained their pre-collapse highs in 25 years.

For Japan, the struggle has been harder.

Thirty years on from its all-time high, the Nikkei Stock Average is still languishing about 40% below the peak of 38,915 scaled on Dec. 29, 1989. The Japanese stock market's uphill climb to regain lost ground is the longest in the history of any major economy.

The bursting of Japan's wild asset-price bubble left a nation of disillusioned and embittered individual investors. Now, they face a tamed market, yet many remain reluctant to wade in.

One of the few Japanese economists at the time who used the word "bubble" to sound the alarm about overvalued stocks in the late 1980s was Kazuo Ueda, now a professor at Kyoritsu Women's University.

As an associate professor at the University of Tokyo at the time, Ueda warned that the sky-high prices "cannot be explained by interest rates and other fundamentals."

Record high: When the Tokyo stock market closed for 1989 on Dec. 29, shouts of "40,000!" could be heard. But prices never made it that far, and a steep drop began the following year. (Nikkei archives)

Many Japanese shares were trading at price-to-earnings ratios of well over 60, compared with the global norm of 14 to 16.

Ueda's warning proved prophetic. At the beginning of 1990, the market began a precipitous decline.The long slump that followed had many contributing factors: a strong yen, low economic growth, deflation and foot-dragging by Japanese companies resistant to reform. The market had suffered a compound fracture rather than a simple break.

But the principal cause of the slow recovery "was that it took a long time to correct share prices that had been so very high," according to Shingo Ide of NLI Research Institute.

The prolonged correction was marked by the unwinding of cross-shareholdings among Japanese companies and higher ratios of foreign ownership. By the mid 2000s, P/E ratios had retreated to international norms. "It is now a normal capital market, in that stock prices simply reflect changes in earnings," said Shigeharu Suzuki, chairman of the Japan Securities Dealers Association.

The average P/E ratio of Japanese stocks is now around 14 -- roughly on par with Europe but lower than the 18 in the U.S.

To help the market regain its appeal to individual investors, tax incentives have been introduced, including the Nippon Individual Savings Account and defined-contribution pension plans.

But bitter memories linger, and many retail investors sell quickly when stock prices rise, an attitude that keeps them from benefiting from long-term upward trends. The long bear market essentially destroyed Japanese retail investors' faith in stocks as an asset.

News source: Nikkei
Sep 22
The political friction between the U.S. and China over TikTok raises strategic questions for Japanese businesses that use the popular video-sharing app in advertising to young consumers. (Sep 22). (Nikkei)
Sep 19
The key inflation gauge went negative again last month, driven down by government discounts meant to boost consumer spending and help the pandemic-hit travel industry. (Japan Times)
Sep 19
The former chairman of Japan Life Co, a now-bankrupt company, was arrested Friday along with 13 others on suspicion of running a "rental owner" investment scam involving clothing, jewelry and other goods it claimed had health benefits, police said. (Japan Today)
Sep 18
Japanese Prime Minister Yoshihide Suga hit the ground running on day one, meeting with ministers in charge of top policy goals from cutting red tape and digitizing the government to combating the new coronavirus. (Nikkei)
Sep 18
Policymakers at the Bank of Japan have decided to keep their current monetary-easing policy unchanged. (NHK)
Sep 18
Developers have released the details of a major construction project that's underway in central Tokyo. (NHK)
Sep 17
Two of Japan's largest rail operators now expect to report their largest full-year net losses since their 1987 privatization, as the coronavirus pandemic brings a deep and potentially long-lasting slump in passenger traffic. (Nikkei)
Sep 16
Fraudulent e-money withdrawals in Japan have expanded to five other service operators in addition to NTT Docomo Inc, internal affairs minister Sanae Takaichi said Tuesday. (Japan Today)
Sep 16
A former aide to Carlos Ghosn has fronted a Japanese court over allegations of financial misconduct related to the under-reporting of pay promised to the ex-Nissan chief. (FRANCE 24 English)
Sep 16
Gambling and casinos in Japan have not been legal for all that long. When looking at the history of casinos, it is easy to say that the future should be brighter than the past. (newsonjapan.com)
Sep 11
Amazon.com Inc's Japan unit has pledged to return around 2 billion yen ($18.8 million) to around 1,400 suppliers after having them shoulder part of the costs to cover discounts the online retailer applied on goods, the antitrust watchdog said Thursday. (Japan Today)
Sep 10
Workers in Japan may be looking beyond the pandemic. A government survey says their view of business conditions has improved, for the fourth month in a row. One index fell and that was for restaurants. (NHK)
Sep 08
A key gauge of business conditions in Japan rose slightly in July, but the uptick was not enough to change the assessment of the economy as "worsening". (NHK)
Sep 07
Massive job cuts caused by the coronavirus pandemic are concentrated on sectors that tend to employ many women, a trend that highlights a lopsided economic impact both at home and abroad. (Nikkei)
Sep 05
A powerful typhoon threatening record-breaking wind and rain for Japan has put companies and transportation networks on high alert, with some moving to cut operations starting this weekend. (Nikkei)
Sep 05
Amazon.com Inc.’s Japan unit has submitted to the country’s antitrust watchdog a set of proposed reforms including returning money to its suppliers after having them shoulder part of the costs to cover discounts the online retailer applied on goods, sources close to the matter said Thursday. (Japan Times)
Sep 04
Japan is making a bid to become Asia's premier financial hub as some institutions exit Hong Kong over political and legal concerns. (NHK)
Sep 01
Warren Buffett's Berkshire Hathaway has bucked the trend of socially responsible investing by acquiring 5%-plus stakes in five Japanese trading houses deeply involved in fossil-fuel-linked businesses. (Nikkei)
Aug 28
A voluntary request to have food establishments in the capital’s central 23 wards operate under reduced business hours will be extended into next month, Tokyo Gov. Yuriko Koike announced Thursday. (Japan Times)
Aug 27
Reader, heal thyself! In many a bookstore in Japan these days, that appears to be the message from publishers to consumers looking for summertime page-turners or browsers in search of popular titles about golf, computers and business-and-finance trends. (Nikkei)
Aug 27
The ratio of women who hold senior positions at companies in Japan has inched up, but remains far below the government's target. (NHK)