Japan Stocks Mirror U.S. Moves By Most in 5 Years: Chart of Day

By Masaki Kondo

Oct. 23 (Bloomberg) -- Japan's stock market is moving in step with the U.S. at the closest level in five years, as the global financial crisis pushes investors around the world to look to New York for trading cues.

The CHART OF THE DAY shows a comparison of Japan's Topix index with the Standard & Poor's 500 Index. The Topix has opened in the same direction as the U.S. index's closing level 79.9 percent of the time this year through Oct. 22, nearing a record 80.4 percent in 2003, from a low of 52 percent in 1993, data compiled by Bloomberg show.

``With the U.S. economy having a large influence over Japanese company earnings, the two markets can no longer be separated,'' said Shinobu Yonezawa, a quantitative analyst at Tokyo-based Shinko Research Institute Co. ``When investors are nervous about news from the U.S., the two markets are more likely to move in the same direction.''

Honda Motor Co., Japan's second-largest automaker, gets about half its operating profit in the U.S. where the collapse of the mortgage market has weighed on vehicle sales. The company's U.S. sales plummeted 24 percent in September, the biggest decline since 1981.

Foreign ownership of Japanese companies has doubled from a decade ago to 28 percent as of March 31, according to the Tokyo Stock Exchange, while investors outside of Japan accounted for two-thirds of trading value in Tokyo in September.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.