Nikkei Index lost 35% in FY2008; Market caps battered

April 1, 2009
By Ken Worsley

At the opening of fiscal 2008, the Nikkei Stock Average stood at 12,525.54 points. After dropping 126.55 points yesterday, the Nikkei closed at 8,109.53 points for a 35.3% drop over the financial year. This morning’s Nikkei reports that corporate pension funds were heavily battered in FY2008, and estimates losses at 17.4%. Banks have also been affected by the downturn in share values, as all three megabanks (Mitsubishi UFJ, Mitsui Sumitomo and Mizuho) are looking at sinking into the red for FY2008.

In another article, the Nikkei points out that a year ago, 82 Japanese firms possessed a market capitalization of one trillion yen or more. As of this morning, that figure stood at 49 - for a 40% decrease.

Toyota, the largest Japanese firm by market cap, saw a 37.2% drop, while Mitsubishi UFJ saw a 40.6% fall, and both Mizuho and Mitsui Sumitomo suffered drops of over 45% in their market capitalizations.

Behind the drops in market caps, according to the Nikkei:

Foreign funds have been among the major sellers of these stocks since last September.

“The more the shares were owned by foreigners, the steeper their falls were,” says an official at Daiwa Securities Co.

Firms that benefit from emerging-nation demand, such as trading houses, were also among the market cap losers.

“Until early last year, there was a view that the economies of advance nations and those of emerging countries do not move in tandem,” says chief economist Yoshikiyo Shimamine of the Dai-ichi Life Research Institute, explaining that such a view did not hold and only amplified the repercussions.

This quote got me confused: “Until early last year, there was a view that the economies of advance nations and those of emerging countries do not move in tandem (sic).”

Amongst whom? Salespeople? Where do exports go?

Filed Under Banking, Finance, Nikkei