Nikkei on Track for Largest Yearly Gain in Ten Years in Japan

The year is drawing to a close, and Japan’s Nikkei share average is feeling the pressure as investors search for guidance in the final trading day of 2023. The index is on track to record its largest annual gain in ten years, but on this last day of trading, it traded lower, down 0.21% at 33,470.37 by midday.

According to Takehiko Masuzawa, the trading head at Phillip Securities Japan, investors have been buying up stocks that have been underperforming while selling those that have shown recent outperformance. This has been due to a lack of significant market-moving cues, leaving investors unsure and hesitant in their decisions.

Despite the struggles on the final trading day, the Nikkei is poised to post its most significant yearly gain since 2013, which was the year when Haruhiko Kuroda assumed the position of Governor of the Bank of Japan and initiated expansive monetary easing measures to bolster asset values. In November, the benchmark hit a 33-year high, thanks in part to a rare call from the Tokyo Stock Exchange to improve capital efficiency. The index is also on course to become the top-performing major stock index, driven by the yen’s weakness against the dollar. The sentiment has been further bolstered by billionaire investor Warren Buffett’s Berkshire Hathaway increasing its stakes in local firms.

In the broader market, the Topix was up 0.21% on Friday, with support coming from Toyota Motor, which saw a 1.58% rise. However, the automotive giant has faced challenges this month, with a safety scandal impacting its small-car unit, Daihatsu Motor, leading to a 7% loss. Sony Group also contributed to the Topix’s gain with a 0.37% increase.

Rakuten Group emerged as the best performer on the Nikkei, jumping by 4.67% after announcing that subscribers to its mobile phone services had surpassed 6 million this month. On the other hand, energy explorers registered a loss of 0.88%, making them the worst performers among the 33 industry sub-indexes. Similarly, refiners fell by 0.61%.

It has been a tumultuous year for the Nikkei share average, with a mix of highs and lows, but as it nears the end of the year, it remains a top performer and on pace to record its biggest annual gain in a decade. Despite the challenges on the final trading day of 2023, the overall sentiment remains cautiously optimistic as investors look ahead to the new year.

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