The Nikkei stock average closed a fraction below 13,000 Friday, the last trading day of the fiscal year, as sharp morning advances prompted profit-taking in the afternoon.
The benchmark Nikkei index slipped 72.66 points, or 0.56 percent, to close at 12,999.70 after rising to 13,457.90 in the morning, up 385.54 points.
The broader Topix index of all first-section issues dropped 7.93 points, or 0.62 percent, to 1,277.27, bringing the aggregate value to 342 trillion yen, down roughly 100 trillion yen from a year earlier.
The Nikkei finished more than 7,300 points, or 36 percent, lower than a year earlier, when the average ended at 20,337.32, although a major reshuffle in April was partly responsible.
Weak figures for overall share prices will likely deal a blow to a number of Japanese firms closing their books this month, eroding latent profits or expanding latent losses. Many Japanese firms book their stockholdings based on Friday’s closing figures.
According to an estimate by Daiwa Institute of Research, some 1,500 nonfinancial sector firms — those excluding banks and insurers — on the first and second section lost roughly 3.09 trillion yen in latent profits on their stockholdings in fiscal 2000.
Based on Friday’s closing figures, overall latent profits for those firms came to 6.64 trillion yen, compared with 9.53 trillion yen as of the end of fiscal 1999, the think tank said.
The prevailing view among market participants is that a number of hurdles stand in the way of full-scale recovery of Japanese share prices.
In a bid to prop up the economy, the government and the three coalition parties are working on a stimulus package, including measures to boost the stock market.
But if the package fails to end jitters over Japan’s economic health, it may lead to further selling of stocks, market participants said.
“It is about time for Japanese companies to embark on full-scale structural reform,” said one analyst.
“We will be closely monitoring the feasibility of the government’s economic package.”
Stocks moved sharply higher in the morning despite a continued setback in U.S. technology stocks and signals that Japan’s economy is being gripped more firmly by deflation.
Toshihiko Matsuno, a senior equity official at Sakura Friend Securities Co., said he suspects artificial buying from public funds was behind the advance.
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