Tokyo Exchange Takes Breather After Run-Up

The Tokyo Stock Exchange didn’t fall as steeply as Wall Street one year ago, it recovered much more quickly, and in April it surpassed its precrash high--the first major stock exchange to do so.

Since then, though, the market here has run out of steam, maintaining its level but showing little energy or confidence. “Sleepy and tiresome,” as George Nimmo of SBCI Securities put it in an interview last week.

In recognition of the softness of the market, the Japanese government has decided to cut back on the number of Nippon Telegraph & Telephone Corp. (NTT) shares it will sell to the public when a third offering is made Wednesday.

Japanese analysts for the most part remain sanguine about the market’s future. Japan’s economic fundamentals remain solid, they point out, with 4.5% growth likely this year and inflation and unemployment still low.

In addition, they say, although foreigners bailed out in large numbers a year ago, Japanese investors never lost confidence in the stock market. Japanese analysts and stock buyers always have had more faith in their market than have foreigners, who were predicting long before the New York crash that Tokyo’s bubble would be the first to burst and who continue to issue such warnings today.

Still, Japanese analysts find a few clouds in the generally bright sky, worries that have contributed to the Nikkei average staying within a narrow trading band between about 27,000 and 28,000 yen for the last six months.

The lingering illness of Emperor Hirohito is unlikely to affect the market in the long run but has already caused some confusion in the short term. Japan hasn’t experienced a passing of the crown since Hirohito took over in 1926, so no one is sure what to expect.