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The recent developments on the Tokyo stock market have been perplexing.

Market participants are turning sanguine, leaving the much-talked-about specter of a March financial crisis behind.

The trigger for the bull run was the antideflation package unveiled late last month. Tightened controls on short selling — a measure included in the package to counter speculative stock sales — set off a flurry of activity to cover short positions on the market.

Investors are now counting on continued buying to cover short positions and a seasonal pickup in market forces of supply and demand at the start of the new fiscal year.

Yet it’s too early to conclude that the Tokyo market has found its bottom.

As always, the speculation-driven upsurge in share prices could soon fizzle.

The nation’s structural problems remain to be addressed, and worries about them remain a major downside risk.

The U.S. economic recovery — now the biggest morale booster — could still turn out to be slower than expected.

What’s more, the tightened regulations on short selling — a move aimed at keeping share prices aloft artificially — carry big risks.

After the start of the new fiscal year, the market could shift its attention back to old problems, and the tide could begin to turn.

Bleak prospects for employment and household income are keeping consumer spending from picking up strongly.

With signs of a rise in capacity utilization still nowhere in sight, manufacturing industries remain in no mood to increase business-fixed investment.

Although the U.S. economy unexpectedly expanded in the October-December period, the growth stemmed from stepped-up government spending. There was no pickup in private-sector spending.

There is talk that foreign hedge funds are busy developing a new computer program to circumvent Japan’s tightened controls on short selling.

When the development of the software is completed in a month or two, any bad news on Japan’s economic fundamentals will spur share dumping in margin trading.

Once investors turn skeptical about the future, a severe downturn may be inevitable. The higher stock prices go, the further they could slide.

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