When you can't see the lighthouse for the rocks

As a breed, stockbrokers don't tend to give much heed to ancient Oriental sayings, but there is one that has been doing the rounds in Tokyo recently. Todai moto kurashi is not a snappy proverb; the best translation would be something like "It is dark at the base of the lighthouse". Less obscurely, it means that people who are standing right next to a good thing often don't appreciate what is under their noses.

Brokers in Japan were quoting this aphorism a couple of months ago to explain a puzzling situation. All year, foreign investors had been swooping on Japanese stocks, spending about $20m (pounds 13m) on them in the first two and a half months of the year. But their enthusiasm was not shared by the natives; during the same period, Japanese investors had been net sellers, although they began cautious buying at the end of March.

This was curious, for the year was indeed looking like a bullish one for the Tokyo Stock Exchange. At its nadir last July, the Nikkei Stock Average sank to below 15,000. These days it is up about 50 per cent, and the fundamentals look healthy. The dollar has got over last year's precipitous plummet against the yen, boosting Japanese exports. The Bank of Japan's discount interest rate, at a record low of half of 1 per cent, makes it cheap and painless for companies to borrow and expand. The government finally seems to be getting its act together in a plan to bail out a group of bankrupt housing loan companies, and the gentle but palpable easing of recessionary fears has imparted a glow of cautious optimism.

To keen foreign buyers, last year's rumours of endemic bank failures and a downward spiralling stock market meltdown seemed an age ago. "There's a fear of not owning Japanese stocks," said one American analyst, back at the beginning of April. "If you don't, and the market goes up, you'll be far, far behind your competitors."

In the past few weeks, however, the situation has reversed itself. Now it is the Japanese who are buying (although still cautiously), while the foreigners have become sellers. Increasingly, the short-term future of the TSE is looking shaky - as yesterday's 99 point drop in the Nikkei 225 index back below 22,000 illustrates. The positive factors which encouraged the buying spree are balanced by a number of big uncertainties.

The most alarming of these is interest rates. Earlier this month, several of Japan's top banks raised their long term prime loan rate to 3.6 per cent, a full 1 per cent up on the year. This may well fuel the recent weakening of the dollar. The combination - an increase in lending costs and the price of exports - could take the sheen off company performance and rob the markets of their buoyancy.

But more fundamental is the government's role. The modest up turn in the economy has not happened of its own accord but has been fuelled by immense public works programmes - more than $600bn of government money has been spent in the past three years on six separate packages, each designed to kick start the economy. Cumulatively, they have had their effect. But the government has made clear that the money tap has now been turned firmly off. As the old proverb fails to point out, the lighthouse may cast a bright light, but if you sail too close to it, you hit the rocks.

Japanese banks have never been pioneers of sexual equality but the Bank of Tokyo (BoT), at least, stood out for its recruitment and promotion of female employees.

The BoT was unique in several ways. Specialising in foreign exchange and international financing, its business was concentrated overseas, with few domestic outlets. Its employees were some of the trendiest bankers in Tokyo: drawn from the top universities, many of them internationally educated, they inevitably served much of their careers overseas. But the BoT was also notable for what, by Japanese standards, was a remarkably enlightened attitude towards women.

Of the 11 city banks, it was one of the smallest in terms of assets (although still the 18th biggest in the world). But it had the oldest and longest- serving female employees (average age 32, average career nearly 11 years) and the highest ratio of women (43 per cent), an impressive proportion of them in managerial and career track positions.

But last month, the BoT ceased to exist in its familiar form. On 1 April, it merged with one of its rivals to form the Tokyo-Mitsubishi Bank. In asset terms, the new bank is easily the biggest in the world, and the BoT's extensive foreign network, combined with Mitsubishi's expertise in domestic financing, give it a formidable presence both inside and outside the second biggest economy in the world. But the corporate cultures were very different: while the BoT was a fast-moving, outward-looking international outfit, Mitsubishi was a proud and conservative Japanese institution - with a very traditional policy towards recruiting women.

Only a third of the old Mitsubishi Bank's employees were women, and they were statistically far less likely to make it to management positions, or to stay at the bank for a lifetime. In the new mega bank, only 5,000 of the 21,000 employees come from BoT; but it supplies 160 of the 240 female managers. These are early days, but the rumours emanating from Tokyo-Mitsubishi are that many of the BoT women fear for their prospects.

"Women are usually just assigned to simple routine posts like clerks," says one ex-Mitsubishi woman, hired on the fast stream, who later quit. "It's taken for granted that serving tea and making copies are women's work. There's an unwritten rule that if bank employees marry one another, one of them resigns and it's usually the woman. Most of them seem to accept it, because they know there's nothing they can do."

Richard Lloyd Parry