Japanese shares are set for a subdued start to 2006 next week with many investors away on holiday but prospects for the coming year are bright as an economic recovery gains traction, dealers said.
The Nikkei ended up 40.24 percent for the year, outpacing other global markets on optimism that an economic recovery is becoming firmly entrenched with deflation seemingly on the verge of ending.
The Tokyo stock market will re-open next Wednesday after the New Year holidays for a half-day session.
"I'm optimistic for the coming year but one risk would be the Bank of Japan lifting the (super-loose) monetary policy too soon," said Yuji Shimanaka, a researcher at UFJ Institute. "It should keep the policy as long as possible."
The Bank of Japan has been flooding the banking system with cash since March 2001 in an effort to stem falls in consumer prices and stimulate growth in addition to keeping interest rates effectively at zero percent.
The central bank has signalled that an end to this "quantitative easing" policy is likely sometime after the end of the current fiscal year in March but is under pressure by the government not to rush towards a policy shift.
No major data or company results are scheduled for next week.
For the week ending December 30, the Tokyo Stock Exchange's benchmark Nikkei-225 index rose 170.06 points or 1.07 percent to 16,111.43.
The blue chip index closed above 16,300 points Thursday for the first time for over five years but eased back on profit-taking in the final session of 2005.
The broader TOPIX index of all first-section shares gained 11.87 point or 0.72 percent over the week to 1,649.76.
Comments
Comments are closed.