A gauge of Japan’s startup stocks is headed for its longest run of annual losses on record as the threat of higher interest rates adds to a list of issues keeping some investors away from the sector.
The Tokyo Stock Exchange Growth Market 250 Index, formerly known as the Mothers Index, is down about 11% so far this year and set for its fourth yearly loss, the longest slump for compiled data going back to 2000. In contrast, the broader Topix has gained 15% as banks and life insurers rose on anticipation their earnings will benefit from higher borrowing costs.
The downtrend for startups could continue as the Bank of Japan seeks to hike interest rates, making it more expensive for new companies to finance research and development. The yen’s recent slump to a five-month low against the dollar has also shifted attention toward Japan’s exporters and away from startups, which mainly consist of companies that rely on domestic revenue.