TOKYO -- Hard times have befallen the largest of the large-cap stocks, with the era of lift-all-boats liquidity giving way to a period in which investors must be more selective.
Japan is no exception. Shares in Toyota Motor, its most valuable company, worth 25 trillion yen ($207 billion), are on the verge of their first down year in four.
The automaker was down 1% for the year as of Friday, the de facto final trading day of 2015 -- shares bought and sold in the remainder of the year are ex-rights -- and has little time to turn its performance around. An intraday gain evaporated, replaced by a 0.76% decline at the close. By contrast, the Nikkei Stock Average was up 8% for the year.
Toyota's peers can tell a similar story. American blue chip Apple, with the world's biggest market capitalization of $602 billion, was down 2% this year as of Thursday. South Korea's Samsung Electronics was down 3%; Industrial and Commercial Bank of China and the U.K.'s HSBC, more than 10%. Just three of 10 major developed and emerging economies had market cap leaders in positive territory for 2015 as of Wednesday or Thursday: France's Sanofi, Taiwan Semiconductor Manufacturing Co. and German group Bayer.
Not since the crisis year of 2008 have top blue chips fared so badly. The MSCI World Index, which tracks large- and midcap stocks in developed markets, is up a mere 1% this year.
"The premium has come off global companies' growth," said Takatoshi Itoshima of Commons Asset Management in Tokyo.
When new money is flowing briskly into stock markets, investors often buy a full set of blue chips first. This strategy proved a nonstarter this year, signaling a period marked by more careful stock-picking ahead.
The liquidity-driven markets of the post-crisis years have arrived at a turning point, best symbolized by the U.S. Federal Reserve's first interest rate hike in nine and a half years. Like the stunning fall in commodity prices, large-caps' poor performance "reflects concerns that monetary easing has reached its limits and a global economy sustained by easy money will now contract," said Norihiro Fujito of Mitsubishi UFJ Morgan Stanley Securities.
One option for coping with this new environment is to seek out "pure micro" stocks, shares in companies with little exposure to macroeconomic risks, according to Ryota Sakagami of SMBC Nikko Securities. Suggestions in the Japanese market include generic-drug supplier Nichi-Iko Pharmaceutical, toymaker Bandai Namco Holdings and frozen-food company Nichirei.
Three years have passed since Japanese equities saw the start of a rising tide. Judging by a market adage, the cycle is about to turn again. 2016 will likely test the real worth of listed companies -- and investors.