The Topix stock index fell to the lowest since January 1984, surpassing a trough in October, as the nation's dependence on overseas markets and a strong yen decimated earnings at its largest companies.
"We're in the middle of the perfect storm at the moment," said James Salter, London-based director of Japanese equities at Polar Capital Partners, which manages $2.5 billion globally. "The inexorable link between exports and GDP hasn't been broken, meaning the domestic economy hasn't been self-sustaining."
The Topix fell to 739.53 Friday, the lowest since Jan. 5, 1984. The gauge surpassed an Oct. 27 low of 746.46 reached during a credit crisis that caused the collapse of Lehman Brothers Holdings Inc. and sent banks including Bank of America Corp. and Citigroup Inc. scrambling for government support.
The Topix is a market capitalization-weighted average of all stocks on the main board of the Tokyo Stock Exchange, akin to the U.S. Standard & Poor's 500 Index.
The Nikkei 225 stock average remains 3.4 percent from a 26-year low.
Japanese firms are projecting profits to dive by 86 percent for the year ending in March, according to data compiled by Shinko Research Institute Co. Half of that decline, or about ¥10 trillion, is due to drops at electronics and automotive leaders like Sony Corp. and Toyota Motor Corp., Shinko analyst Mitsutaka Yamamoto said.