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Back to the '80s: Japan's market at 26-year low

October 28, 2008|Tom Petruno | Tom Petruno is a Times staff writer.

There are bear markets -- and then there is the Japanese market.

Tokyo's Nikkei 225-share index plunged 486.18 points Monday, or 6.4%, to 7,162.90, its lowest close since October 1982.

That's 26 years with no net gain in Japanese shares -- a track record that mocks the standard investment advice to just "hold on for the long term."

As Bloomberg News noted: "The last time Japan's Nikkei index was at today's level, headbands and leg warmers were in, Steven Spielberg's 'E.T.' topped box offices, and Michael Jackson's 'Thriller' was about to be released."

Asian markets were slammed again Monday by deepening fears of global recession and financial-system turmoil. Hong Kong's Hang Seng index dived 1,602.54 points, or 12.7%, to 11,015.84. The Singapore market dropped 8.3%; Taiwan's market lost 4.6%.

In Tokyo, shares of banking firms Mitsubishi UFJ Financial Group and Mizuho Financial Group fell on concerns that they would need to bolster finances by issuing more shares.

Worries about Japan's economy have been intensified by a soaring yen, which stands to make exports more expensive. The yen has rallied dramatically in recent weeks, in part as Japanese investors brought money home from overseas.

In an unexpected statement Monday, the Group of 7 industrialized nations expressed concern about "excessive volatility" in the yen. That was intended as a warning that the group might intervene to weaken the Japanese currency.

But the yen strengthened to as much 91.90 per dollar overnight, and closed at 93.93 in New York on Monday. The rate was 105.3 per dollar Oct. 3.

Measured from its recent high of 18,262 in July 2007, the Nikkei has lost 61%. The Standard & Poor's 500 index, by contrast, is down 44% from its peak reached a year ago.

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tom.petruno@latimes.com

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latimes.com/moneyandco

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