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Tokyo stocks are threatening to take the key Nikkei average into a range between 10,000 and 11,000.

The 225-issue Nikkei average is at its lowest level in more than 16 years as it includes many information- technology stocks that have plunged due to the burst of the IT-led speculative bubble.

But the broader Topix index of all first-section issues is 20 percent higher than its record low set in October 1998.

Which of the two indexes more accurately reflects real economic activity?

While the question has yet to be answered, there is no denying that domestic stock prices are closely linked to those of U.S. stocks.

In the future, however, domestic stocks are expected to move of their own accord.

U.S. stocks stayed on the rise for more than 20 years through the second half of the 1960s amid the World War II victor’s postwar boom.

After price adjustments in the following decade, U.S. stocks resumed climbing for nearly 20 years until last year, forming their second long-term ascent.

In contrast, Japanese stocks started a full-scale rise in 1965, about 20 years after U.S. stocks, and kept climbing until Japan became a major creditor country.

They hit a ceiling in late 1989 and have since stayed in an adjustment phase.

Given that torical background, U.S. stocks may have kicked off a long-term downtrend, while Japanese stocks may be on the threshold of their second long-term rising phase.

The 20-year difference is also seen in the leaders of the two countries.

Prime Minister Junichiro Koizumi has risen to power on promises of reforms to revive Japan, just as Ronald Reagan gained the U.S. presidency 20 years ago on a platform of reviving America.

Like Koizumi, Reagan also received overwhelming public support.

The Koizumi administration must carry out structural reforms without delay to ensure the domestic market enters into a long-term rising phase.

Needless to say, the administration must also adopt policy measures to realize an economic recovery in order to implement the reforms smoothly.

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