Page last updated at 11:52 GMT, Tuesday, 29 December 2009

Nikkei peak: 20-year anniversary

Japan's Nikkei over 20 years

It is exactly 20 years since Japan's Nikkei hit its peak of 38,957.

The index now trades at about quarter of that value. In other words, it has lost about 73%, closing at 10,638 on Tuesday.

Back in 1989, Japan's growth was seen as unstoppable, with some analysts expecting the Nikkei to reach 100,000.

But as the bubble in the property market burst dramatically, so the stock market fell and Japan's economy has never quite recovered, struggling with deflation and sluggish growth. Here's what people are saying for 2010:

"The market appears to be looking at a slow recovery next year, though there are still likely to be some unseen risks ahead and the chance of some unpleasant surprises. Yet I don't think we'll face anything as bad as what happened to markets after last year's Lehman failure."

- Hiroaki Osakabe, a fund manager at Chibagin Asset Management.

"Caution will be also necessary as we head into the new year. It's hard to think the market will just keep rising as there's still a chance it could very well test another trough."

- Yutaka Miura, chief technical analyst at Mizuho Securities.

"In 2010/11, Japan may have its day, provided it mends its relationship with China... domestic demand has to be limited because of where and how they live. With its 125 million population mostly living in small dwellings along the coastline, there's a limit to how many consumer goods they can buy. But with Asia's growth picking up... Japan can only benefit.

- David Buik, analyst at BGC Partners

"At the time [in 1989] there was a kind of irrational exuberance among the Japanese. They tended to think the economy would increase forever and even surpass the US... In reality, that time was boosted by financial bubble. Right now, our economy is still struggling to get out of low growth and stagnation. If we want to benefit from growth in Asia, our manufacturers should shift their focus from high-grade value-added products to medium-growth value-added, which is where the growth is - and what China and Korea are very good at."

- Tetsuro Sugiura, chief economist at Mizuho Research Institute

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