Nikkei editorial writer Kodaira Ryushiro (小平隆四郎) examines the factors behind Japan's “lost 30 years” and the changes in its markets, focusing on the period around the collapse of Yamaichi Securities, and looks back at the backdrop to today's stock market. He shares insights drawn from his book and reporting.
The Nikkei 225 is entering a prolonged recovery phase, setting a new high on 22 February 2024, about 34 years after its previous record in 1989. Nikkei editorial writer Kodaira Ryushiro (小平龍四郎) organises more than 30 years of change from an on-the-ground perspective and proposes viewing the period not simply as the “lost 30 years” but also in terms of the “10 years that were lost.” In his book “Before and After Yamaichi: The Defeat and Reconstruction of Japan's Securities Market,” he details the changes in the market.
In the first half of the 1990s, the market remained underdeveloped, the definition of insider trading was unclear, and the 5% rule had not yet been introduced. As a result, it was impossible to tell who had been buying up shares, creating an environment susceptible to speculation. He recalls that this situation, in which external scrutiny was limited, continued until the Securities and Exchange Surveillance Commission was established in 1992. There were also cases of misconduct in which losses from financial engineering were concealed off the balance sheet, increasing the need for tighter regulation.