HSBC Holdings PLC, Europe's biggest bank, will shut its stock-research and trading businesses in Japan, joining UBS AG, Goldman Sachs Group Inc. and Citigroup Inc. in a retreat from the world's second-largest economy.

As a result of the closure, about 40 people in the equities business will lose their jobs, said two sources familiar with the dismissals. The firings will amount to less than 5 percent of the 1,100 employees the bank has in Japan, Hong Kong-based spokeswoman Vinh Tran said in a recent interview. She declined to give an exact figure.

Foreign financial firms fired about 4,300 people in Japan in the 15 months through March, according to Executive Search Partners Co., as the economy heads toward its worst recession in 60 years. The benchmark Topix index slumped to the lowest since December 1983 last month, and trading by overseas investors has dwindled.

"The group is refocusing on emerging markets," said Lee Yuk-kei, a Hong Kong-based analyst at Core-Pacific Yamaichi International. "Growth potential in developed markets like Japan is almost nonexistent. It doesn't fit into their strategy."

Foreign investors in Japan have divested 95 percent of the shares they bought since 2005, with net selling totaling 10.7 billion shares since July 2007, according to Bloomberg data.

London-based HSBC listed 10 equities analysts in Japan covering industries including autos, banking, insurance, technology and telecommunications in a March 31 research note. It had five in sales, four in sales trading and two in international sales, the note said.

"We're migrating Japanese equity operations to Hong Kong," said Tokyo-based spokesman Paul Allen. "We will continue to cover some Japanese companies using the HSBC global network, but we will not be doing research out of Tokyo."