On Friday, Japan’s Nikkei 225 index crossed 37,000 points for the first time in 34 years.
This event has sparked interest among investors about potentially surpassing the record high from December 1989.
The Financial Times highlighted that the market reached 37,285 points. This is close to the highest ever level of 38,915 points.
In just two days, this key index has climbed by a thousand points. The Topix index also saw significant gains, hitting a 34-year peak of 2,576 points.
Factors like the weakening yen and robust earnings from giants such as SoftBank and Toyota have lifted market spirits.
This uptrend, driven by heavy buying from overseas investors, suggests the market might be breaking free from a long period of underperformance.
Data from the Finance Ministry shows that since 2024 began, foreign investment in stocks has hit $19 billion, with $2 billion in the last week alone.
The shift towards Japan has become more pronounced over the last year and a half, with global investors turning away from China due to economic and market worries.
Year-to-date, the Nikkei’s increase of 11.65% is noteworthy, with significant contributions from companies like SoftBank and Tokyo Electron.
Yet, the most influential stock is Fast Retailing, Uniqlo’s parent, making up 10.9% of the index and achieving a record high on Thursday.
Despite Toyota’s larger market size, its influence on the Nikkei 225 is limited to just 1.5%.
Crucial trend signals Japan’s economic growth, reflect investor confidence and strategic responses to global markets.
Background
The rise of Japan’s stock market is more than a short-term trend; it marks a significant turn in investor sentiment. For decades, Japan’s economy faced challenges, from stagnation to deflation.
Yet, recent corporate successes and strategic government policies have sparked optimism.
This resurgence aligns with increased global investment diversification, as concerns over other markets drive investors towards Japan.
Historically, Japan’s “lost decade” saw a prolonged economic downturn. But now, policies to stimulate growth are paying off, as evident in stock market performance.
Additionally, Japan’s focus on technological innovation and export strength has attracted global investors.
This shift not only benefits Japan’s economy but also signals a broader change in global economic dynamics, highlighting the country’s return as a pivotal market player.