Analyze The Japanese Stock Market Performance

Japan is one of the fastest growing economies of Asia. Its market has got immense potential. Japan is well ahead of other countries in Purchasing Power Parity model. This shows the life style and living standard of its people. Now, lets watch closely the Japanese stock market performance which is the biggest stock market of Asia and second biggest stock market of the world. So, a thorough analysis of Japan's stock market is necessary to understand the whole economy of the country.

In spite of having a strong economy, the Japanese stock market has entered a lean phase and is not doing too well. There are certain standards that this market is not fulfilling for last three years. These days, the market has hit a rough patch. There is no upward movement being witnessed. The equities are also facing troubled times, especially in the current financial year.

It should be noted that the market was hiked to about 40% in the last financial year but since then the situation has only got worst. As proposed by the experts there are various reasons for the downslide of the Japanese Stock Market, the first one being the inadequate earnings of the Japanese Corporate houses. In other word , the growth of the corporates has slowed down.

The second reason for the down slide of the Japanese stock market is that the consumption of goods in the domestic market has reduced significantly. The living standard of people has gone down and the effect of the same on the economy is clearly visible. It is like a vicious circle where living standards of people go down with the dip in economy and the economy dips with the low living standard of the people.

The third and the final reason for this dip in the market is that the Japanese banks are not showing any capability to handle the downgrading economy which has further aggravated the problem. The combined effect of these factors has made the market very expensive as compared to the standards of Japan as a country. It was estimated in a company's survey that the Japanese market is 20 % costlier than the world market.

Another problem that has cropped up recently is that a large number of foreign companies are leaving Japanese stock market. The number of foreign listed companies has come down to 25 from 125 in 1990's. This, according to the economists is a great setback for the economy of Japan. So, it can be concluded that Japanese stock market performance has been dipping for last three years and needs to be scanned to avoid further damage.