Japanese Stocks Reach Record High After Overcoming Bubble Economy

2024.02.21 23:31

Japanese Stocks Reach Record High After Overcoming Bubble Economy

By Kristina Sobol

Budrigannews.com – Japanese Stocks Reach Record High, Surpassing 1989 Bubble Economy Peak Japanese stocks soared to a record high on Thursday, February 16, 2024, surpassing the previous peak set during the bubble economy of 1989. The Nikkei 225 share average surged by approximately 2%, reaching 39,000 points, surpassing the previous intraday record high of 38,957.44 points set on the final trading day of 1989.

This milestone marks a significant moment for the Japanese stock market, as it took 34 years to regain the levels seen during the bubble era. This is the longest time it has taken for a major market to recover from a significant downturn, surpassing the ten years it took Wall Street to recoup losses from the 1929 crash and the Great Depression.

The resurgence of the Japanese stock market can be attributed to several factors. Firstly, the relatively low valuations of Japanese stocks compared to other developed markets have attracted foreign investors seeking alternatives to the battered Chinese markets. Secondly, corporate reforms in Japan, such as increased share buybacks and the unwinding of cross-holdings, have improved corporate governance and made Japanese companies more attractive to investors.

The Nikkei’s rally has been remarkable, especially considering the economic challenges that Japan has faced in recent years, including a recession, global inflation shock, and rising interest rates worldwide. However, the country’s trade exposure has helped insulate it from deteriorating domestic demand, while the weak yen has boosted the earnings of exporters.

Moreover, foreign investors have played a significant role in driving the Nikkei’s rally. In 2023, foreign investors poured in 6.3 trillion yen ($42 billion) into the Japanese equity market. This trend continued in January 2024, with foreign investors spending a net 1.16 trillion yen in Japanese equities. The attractive valuations, combined with the robust earnings season and the falling yen, have further fueled foreign interest in Japanese stocks.

The milestone of reaching a record high is a testament to the resilience of the Japanese stock market and the reforms that have been implemented to improve corporate governance and attract foreign investment. It is a positive sign for the Japanese economy and could lead to further gains in the stock market in the future.