Why '97 May Be Nasty For The Nikkei

Slow growth, a tight budget, and deregulation are making investors nervous

Last year began in Japan with hopes that economic recovery would bring the country's six-year-long stock-market blowout to an end. Instead, 1996 ended bringing investors nothing but bad fortune as the Nikkei stock average plummeted 8% in December (chart), wiping out the modest gains scored in previous months. Worse yet, expectations of even more losses in '97 hung heavily over dispirited traders as they headed to hot springs and ski resorts for the extended New Year holiday.

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