15 years of January TOPIX

by SR on January 23, 2012

Since we’re most of the way through the first month of 2012 I thought I’d take a look over the weekend at what past Januaries have looked like for the Japanese index. The charts below show (a) the absolute level of TOPIX for each January since 1998 (b) the percentage change for the month for each January (c) the percentage change for TOPIX during the year as a whole, from 1998 to 2011 and so far in 2012 and (d) the TOPIX rebased into US dollars and compared to the S&P500.

Rock bottom. I haven’t checked back to the 1980s but having the TOPIX below 800 is clearly a Bad Thing. Look at the first chart; the horizontal dotted line represents the 1,000 level. Even in early 2009 the index only dipped briefly below the 800 level and moved strongly  back above it in March. Of course, the weakness of TOPIX in January 2012 is no surprise as it is a continuation of the weakness that has afflicted the market since August 2011 in the form of the rumblings about Europe lower growth again in China. Still, when placed in context like this the weakness of 2012 really jumps out at you.
TOPIX performance for the month of January by year since 1998
Here are the percentage changes for the month of January since 1998.
TOPIX performance for the month of January by year since 1998
“The only way is up”? I don’t think there’s much point in going pseudo-quant and saying “if the market falls in January there is x% chance of the index falling for the year as a whole”. Too much happens in each 12-month span to make calls like that. I’ll just note that the market has fallen for 8 out of the past 15 years, but that even after the dotcom bubble burst in 2000 the market fell for ‘only’ three years. Well, we had a decline in 2010 and 2011; is another on the cards? What I do think is interesting is the violence of the bounce: the market bottomed on 12 March 2009 and by early June had risen 35%. Moral of the story? Be in early, which is easier said than done in such a volatile environment. Not much fun around for either buy or sell side of late.
TOPIX performance for the month of January by year since 1998
TOPIX performance for the month of January by year since 1998

Year Change in TOPIX
1998 -6.3%
1999 61.7%
2000 -25.7%
2001 -19.6%
2002 -18.3%
2003 21.3%
2004 8.6%
2005 43.0%
2006 0.5%
2007 -13.1%
2008 -39.1%
2009 3.6%
2010 -1.9%
2011 -20.1%
2012 1.7%

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