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Japanese stocks fell on Tuesday as investors closed positions ahead of the long New Year holidays and fretted over political turmoil in Greece.
The Nikkei benchmark fell 0.6 per cent to 17,627.96 points by 0141 GMT, but remained on course for a yearly gain of almost 8 per cent.
In 2013, the Nikkei soared 57 per cent on the back of Prime Minister Shinzo Abe’s easy-money policies.
Greece is heading towards snap election next month after its Parliament rejected its Prime Minister’s nominee for president on Monday, just as it emerges from an economic crisis that shook the euro zone.
Weak yen, BoJ bond-buying
A depreciating yen and aggressive asset buying programme by the Bank of Japan in 2014 helped equity investors shrug off concerns about the Japanese economy, which slipped into recession after an April sales tax increase hit consumer spending harder than expected.
With Prime Minister Shinzo Abe’s reflationary policies set to continue next year, investors maintained a bullish outlook.
“The new year will be very positive, with stocks boosted by likely additional easing by BoJ and corporate earnings growth,’’ said Takashi Hiroki, chief strategist at Monex Inc.
“The Nikkei may hit 20,000 yen by April.’’
Fresh monetary easing
With the political onus on Abe to realise his promise to revive the economy, the central bank may launch a fresh round of monetary easing in April.
In October, the BoJ tripled its buying of exchange-traded funds to ¥3 trillion, and may double it again in April, Hiroki said.
A corporate tax cut of at least 2.5 percentage points after April and a yen hovering near 7-1/2 year lows is also set to boost Japan Inc’s profits in 2015.
Health-related stocks retreated after a man suspected of contracting the deadly Ebola virus was given the all-clear. Protective clothing maker Azearth Corp fell 10 per cent, surrendering most of Monday’s 16 per cent increase.
Toray Industries Inc was Nikkei’s best performer, jumping 4.0 per cent after a report by the Nikkei business daily that it will supply German auto giant BMW with carbon fibre, and plans to double the production capacity at its Mexico plant.
The broader Topix fell 0.6 per cent to 1,415.77, on course for a yearly gain of around 8.5 per cent. The JPX-Nikkei Index 400 lost 0.7 per cent to 12,843.55, and is set to post a gain of over 9 per cent for 2014.
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