Nikkei’s 15-Year Flashback Shows Big Winners, Steve Jobs FalloutYuji Nakamura
The Nikkei 225 Stock Average rallied Thursday to levels unseen since the year Sony Corp.’s PlayStation 2 went on sale and Al Gore still had a shot at being president. A lot’s changed since May 2000 -- and some things haven’t. Here’s a quick look at some of the major trends.
1. All Hail the Camry: Toyota Motor Corp. has ascended the ranks to become Japan’s most valuable company, rising from third place in 2000. With a market value of 27.6 trillion yen ($232 billion), the carmaker has capitalized on the popularity of its family-friendly vehicles and expanded its customer base with the fashionable hybrid Prius. Innovation is a common thread among the Nikkei 225’s winners, with robotics maker and Dan Loeb-target Fanuc Corp. rallying Thursday to the highest close since listing in 1976. Fanuc is worth 5.6 trillion yen, putting it in the Nikkei 225’s top 10 companies. The family-owned business squeezed on to the stock measure in April 2000.
2. Going Nowhere: Of the Nikkei 225’s current members that existed in May 2000, 16 have moved less than 10 percent since then, with semiconductor manufacturer Screen Holdings Co. gaining just 1.5 percent. Still, things could be worse: stereomaker Pioneer Corp. lost 93 percent of its value in the span, the biggest decline.
3. Apple Fallout: The end of Japan’s supremacy in electronics can be traced to Steve Jobs. With iPhones and iPads replacing music players, cameras and video-game consoles, Apple Inc.’s market value of $748 billion exceeds the total value of $546 billion for the Topix Electric Appliances Index, which includes Sony, Canon Inc., and Panasonic Corp. The gauge sank 41 percent since 2000, as Apple soared almost 3,000 percent. While Japanese electronic makers are down, they’re not entirely out: the industry is still the biggest by equity market capitalization in Tokyo. The next four groups are also the same today as in 2000, with automobiles, banks, phone companies and chemical makers rounding out the top five.
4. Asian Boom, Domestic Gloom: As a struggling local economy weighed on Japanese stocks through the 2000s, the nation’s neighbors provided some solace. Japan’s exports to the rest of the Asian region nearly doubled from 2000 through 2014, helping truckmaker Isuzu Motors Ltd. outperform the Nikkei 225 by 250 percentage points. The index, which closed Thursday at 18,264.79, has evolved to reflect the regional boom. Pacific Metals Co., which exports mainly to South Korea and Taiwan, was added to the measure in 2008. It replaced builder Kumagai Gumi Inc., which gets all its sales in Japan.
5. Uniqlo Distortion: In 2000, Fast Retailing Co. was a domestic maker of casual-wear that had just inched its way on to the first section of the Tokyo Stock Exchange. Now the Uniqlo brand is a global clothing behemoth and, due to the Nikkei 225 being a price-weighted index, Fast Retailing is the most influential share on the measure. Since making it on to the index in August 2005, it’s boosted the gauge by more than twice as much as any other stock.
6. Inflation (Barely): The Nikkei 225’s current rally comes against a backdrop of unprecedented monetary easing as the Bank of Japan seeks to end deflation. While its goal of 2 percent price increases remains distant and oil’s slide is making the task even tougher, the central bank’s favored inflation measure eked out a 0.5 percent increase in December. Back in 2000, the gauge fell in every month as Japan headed into a decade defined by recessions and declining prices. That’s not going to happen again, with Japan focused on a sustainable recovery, says Prime Minister Shinzo Abe. His predecessor in 2000, Yoshiro Mori, said the same thing.
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