Tokyo's new year sell-off gathers pace

The new year sell-off in Tokyo accelerated yesterday as Japan's benchmark Nikkei 225 index fell more than 600 points, its third sharp fall in a row and the heaviest one-day decline since April 1995. In the four trading sessions so far this year, the Nikkei has slumped almost 1,300 points to its lowest level for 14 months as investors have panicked, fearing that bad debts and low growth will continue to hobble Japan's financial institutions and economy.

The collapse in Japanese shares coincided with a visit to the country by the Chancellor of the Exchequer, Kenneth Clarke, who contributed to the debate on the future of Japan's markets by calling for more rapid deregulation of the heavily controlled financial system. He also advised Japan's Finance Minister, Hiroshi Mitsuzuka, to use privatisation to reduce the government deficit.The Japanese government, which faces a 7.4 per cent annual fiscal deficit, is aiming to reduce the deficit to 3 per cent or less by 2005.

Mr Clarke is understood to have said the government should move more quickly than a projected five-year deregulation programme. Mr Mitsuzuka responded that the government intends to implement deregulation sooner if possible, and reminded him that the non-life insurance market will be completely deregulated by July 1998.

Japan's stock market has been the biggest loser among the world's bourses so far this year with all its main indexes having lost more than 5 per cent of their value. At Thursday's close of 18,073.87, the Nikkei remains firmly locked in the depressed trading range it has been stuck in since 1992 when the market finally bottomed out after a 50 per cent plunge from its 1990 high of almost 40,000.

For almost five years the Nikkei has threatened to break out of the 15,000 to 20,000 trading range but recurrent worries that the government is unable to stop the decline in land prices or clean up the bad debt hangover from the late 1980s bubble economy have so far kept equities in check.

Yesterday Mr Mitsuzuka said the government had no plans to boost the Tokyo stock market, causing Japanese investors to fret about a repeat of 1995's fall in the Nikkei to less than 15,000. Asahi Mutual Life Insurance's Koichi Kurata said: "The market is going to continue to decline unless the government does something. The biggest problem continues to be bad debt. Investors were pretending the problem had gone away."

Japan's tumbling stock market was viewed phlegmatically by European markets yesterday, with the plummeting Nikkei index providing little more than a long-distance spectator sport for traders here.

Although Japan is the world's second-biggest economy, few European companies have a meaningful exposure there. Fears of slowing growth have little bearing on European businesses.

Sport
The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week