It's IT-related machinery orders that have been growing at near triple digit percentages in the past several months. PC shipments rose 85 percent last year and PCs have now penetrated 28.5 percent of Japanese homes. And NTT Mobile Communications Network Inc said on Thursday that subscribers to its i-mode Internet service for mobile phones have surpassed five million people. It was thus quite a shock when Internet and other technology stocks took a nasty nose-dive early this past week. The likes of Softbank and Hikari Tsushin made a strong comeback later in the week even as the US Nasdaq remained shaky.
Investors are uncertain everywhere about the proper valuation of Internet stocks.
That translates into higher volatility. But no one decline should be mistaken for a more permanent downturn. Old economy stocks are less volatile, but with much less growth potential - simply mirroring the underlying economic realities. And in Japan in particular, God forbid the economy as a whole having to depend on recovery in the traditional sectors. While most IT-related companies have little debt, a huge debt burden continues to weigh down the rest and the large increase in bankruptcies and liabilities there is a telling point.