Jan. 3, 2010 (The Yomiuri Shimbun) -- An old adage among stock company employees and investors says: "In the Year of the Ox, [stock prices] stumble. In the Year of the Tiger, they leap. In the Year of the Rabbit, they jump."
It means that stock prices stagger along during the Year of the Ox, turn upward in the following Year of the Tiger and then surge in the following Year of the Rabbit.
But looking back, the Nikkei stock index of 225 selected issues fell in four of the five Years of the Tiger since the end of World War II. The index did not gain ground as the saying suggested it would.
Looking ahead to 2010--the Year of the Tiger--economists are split over how stock prices will fare, with the yen's appreciation expected to escalate and the nation mired in deflation. The future of the Japanese economy also seems uncertain.
Shoji Hirakawa of UBS (NYSE:UBS) Securities Japan Ltd. is one analyst optimistic about the stock market's prospects for 2010.
"Considering the growing demand in emerging economies and a rise in consumption thanks to the Democratic Party of Japan's economic policy, [the Nikkei index] will recover to 12,000 next spring," Hirakawa said.
However, the government's economic forecast for fiscal 2010 that was released Dec. 25 was grimmer, predicting that the consumer price index will fall 0.8 percent from 2009 and the unemployment rate will remain stubbornly high at 5.3 percent.
The yen's strength against other major currencies pushes down stock prices, and more of the same could be in store this year.
"We predict the rate will surpass 80 yen to the dollar due to fears about the future of the global economy," an official of a major trust bank said.
Yoshikiyo Shimamine of Dai-Ichi Life Research Institute is another who predicts 2010 could be tough going for the stock market.
"It'll be difficult for the world economy to recover quickly, so stock prices could fall back to 8,000," Shimamine said.
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Economists' predictions for the Nikkei stock index in 2010
Chisato Haganuma
Nomura Securities Co.'s Financial and Economic Research Center
9,500 to 13,000
The U.S. economy will steadily recover and the country will raise interest rates in the middle of this year. Foreign exchange rates will stabilize with the dollar strengthening and yen weakening. Japanese companies, especially exporters, will see a rebound in business performance.
Shoji Hirakawa
UBS Securities Japan Ltd.
10,000 to 12,000
Demand in emerging economies will expand and exporters, such as automakers, will see a sharp recovery their performance. The Democratic Party of Japan's policies, such as a child-rearing allowance, will lead to a recovery in domestic demand.
Norikazu Kitta
Nikko Cordial Securities Inc.
9,000 to 12,500
Public expectations for economic stimulus measures will grow ahead of the House of Councillors election and peak around summer. Stock prices will temporarily fall after that, but will gradually recover toward the year-end.
Yoshikiyo Shimamine
Dai-Ichi Life Research Institute
8,000 to 11,500
The U.S. economy's recovery will be delayed and the yen will continue to appreciate. Stock prices will fall toward the year-end unless the government implements effective additional economic stimulus measures.
