The Daily Update: Nikkei Tops 30,000 / Decimalisation

It’s taken more than 3 decades, however, yesterday Japan’s Nikkei 225 index topped 30,000 for the first time since August 1990 as it continues to surge back through levels not seen since the bubble economy burst back in the late 80’s. At the height of the Japanese boom in the late 1980s - the Imperial Palace, with its surrounding grounds, had a (theoretical) higher value than the whole of California, some golf memberships were +$1m and a Van Gogh was bought for $40m by an insurance company to go on the boardroom wall.

The Nikkei still needs to gain another 30% to exceed its record of nearly 39,000 back in 1989. From those heady highs the index hit a low of just below 8,000 14 years later before a recovery to 16,700 then promptly falling back to around 8,200. It was about 9 years ago when the recovery finally gained traction.

The Nikkei’s rise comes as figures show that the Japanese economy expanded more than anticipated in Q4 ’20, extending the recovery from its worst post war recession thanks to support from consumption, capital expenditure and exports. The world’s third-largest economy grew an annualised 12.7% in October-December period, marking the second straight quarter of increase and exceeding a median market forecast for a 9.5% gain. (The economy grew 22.7% in the previous quarter).

A breakdown of the data showed that capital expenditure grew 4.5%, marking the first increase in three quarters and exports added 1% to the growth. However, it was private consumption, which makes up more than 50% of Japan’s economy, raising 2.2% after a 5.1% increase in the previous quarter, that was the eyeopener. Markets forecasts had been for a 1.8% gain.

Also, yesterday it was 50 years since the UK’s currency went decimal, out went tanners, shillings, and florins and in came new coins including the 5p piece. It was the biggest change in the UK’s monetary system for more than 1,000 years. Before February 15 1971, the British pound was made up of 20 shillings. Each shilling was made up of 12 pence, so a pound was 240 pence. With decimalisation, the British pound kept its old value and name, and the only changes were in relation to the sub-units.