TOKYO, May 24 Reuters Japan s Nikkei 225 N-225 share average will drop 4% from 33-year highs, return to the psychologically key 30,000 level by year-end and trading around the same level in mid- 2024, according to the median estimates of analysts polled by Reuters.
Responses varied widely, revealing a deep division over the outlook for a benchmark index that had until Tuesday been confounded calls for a pause in its breathless ascent to a post-bubble era peak.
The first signs of frailty emerged in the afternoon session, when it plunged 1.67% from the highest mark of 31,352 in August 1990. In the morning, 53 hit before ending the day down 0.42% at 30,957. 77 would snap an eight-day winning streak.
The prediction for the year-end from 15 analysts in the survey ranged from 35,000 at the top end a level not seen since February 1990 to 26,000 at the bottom where the Nikkei started 2023.
Four surveyors set a target of exactly 30,000, indicating a 3.1% fall from Tuesday's close.
The range was also broad for the ten mid-term 2024 forecasts, ranging from 25,000 to 35,100, with two calls at exactly 30,000.
There was little consensus over the direction of the Nikkei in the past three months, with four analysts expecting narrow range-bound trading, two favoring rallies of 10% or more and two seeing a 10% correction as the most likely outcome.
The Tokyo Stock Exchange's push for increased corporate governance has been a crucial factor in the rise of the Nikkei's rally, which has had a significant effect on the foreign investors who have been heavily involved in the Nikkei rally. The Bank of Japan's outlook for continued ultra-easy monetary policy was also highlighted.
The trend for the Nikkei is likely to continue, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, which forecasts a rise of 33,500 by year-end and 35,100 by mid-2024.
In contrast, Bulls and bears both signaled the importance of corporate earnings, after a particularly strong reporting season allowed the Nikkei to step out of a rut in late April.
China's sputtering post-lockdown recovery has been cited as a key risk because so many of the Nikkei s constituents are exporters.
Analyst consensus for the corporate outlook may be cut toward mid-year as China's economy has weakened, said Yunosuke Ikeda, chief equity strategist at Nomura Securities.
The economic downturn in China has not been a major factor in Japanese firms' prospects for the future, they said.