Nikkei and TOPIX, Now and in 2003

After the market close on Friday, the Nikkei published a table showing various metrics of such things as where the Nikkei 225, TOPIX-1, yen, and JGBs are trading now versus five and a half years ago (April 28, 2003) when the N225 hit a post-bubble trough (note we’re about 40 points away from that bottom and early futures trading doesn’t bode well). Following is a summary and additional detail to some of the metrics:

1. TOPIX-1 is actually 4% above where it was on 4/28/03. However, one key difference is the index trades at less than book value (0.97) versus 1.2x then. Another major difference: trading at 11.6x forward earnings now vs. 53.7x then! Forward dividend yield: 2.7% vs. 1.2%. Also, trading volume and turnover are both up more than 3.5x.

2. The yen, most recently at around 95 per US$, has appreciated some 20%. Against the euro, the upside is about half that amount.

3. Long-term JGB yield of 1.5% now vs. 0.6% then. (That’s right. That low and again with the dividend yield of TOPIX-1 far higher. We know what went on to happen by late ‘05.)

4. The Nikkei threw in Sony (JP: 6758) (SNE), whose downward revised earnings forecast ignited a sell-off on Friday (see here). Sony’s ordinaries are down 27.5% compared to 5 1/2 years ago. No near or mid-term relief in sight. As I explained last Friday, concerning the sell-off of “exporters,” it wasn’t a secret that demand has soured and forex projections are way out of whack.

Disclosure: No position in Sony.