Photographer: Noriko Hayashi / Bloomberg
Photographer: Noriko Hayashi / Bloomberg
The Japanese stock average of Nikkei 225 exceeded 30,000 yen for the first time since August 1990, as it continued its load backwards to levels not seen since the collapse of the bubble economy. .
The indicator rose 1.9% to close at 30,084.15 on Monday, amid signs that the economic recovery is intact at home and hopes for progress in US stimulus talks. Although global stocks have reached new levels in recent months, the Nikkei 225 still has to gain almost 30% to break its 38,915.87 record. This was achieved in the final trading session of 1989, before the index lost more than half of its value in three years after the bursting of the economic bubble.
Japanese stocks have been recovering after hitting a low in 2012 following the previous year’s earthquake disaster. Former Prime Minister Shinzo Abe’s efforts to revitalize the economy and increase corporate value through better governance since he took office in 2012 have supported stock price hikes ahead of the merger. year.
The brief default of 30,000 shows that “all kinds of investors are engaged in buying Japanese stocks with a totally bullish outlook,” said Shoji Hirakawa, global chief strategist at the Tokai Tokyo Research Institute Co.
This opinion was asserted on Monday when Japan announced this gross domestic product it grew by 12.7% year-on-year compared to the previous quarter in the three months to December, as exports continued to rebound and government stimulus fueled consumer spending despite the coronavirus.
Continued economic growth is one of the factors contributing to the strength of Japanese equities, according to Nikko Asset Management Co.’s chief global strategist, John Vail, who hailed strong exports and private equity data. Japan’s reasonable valuations compared to those of the bubble era, as well as improved profits and shareholder profitability, are also strengths, he said.
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“There are always doubters who perpetually point to demographics,” Vail said, “but this has not prevented a huge growth in corporate revenues, including those from Japan’s vast global manufacturing bases.”
Foreign buyers
Foreign investors turned net buyers into cash and futures stocks for the first time in four weeks, buying about 856 billion yen ($ 8.2 billion) during the week ended Feb. 5, according to Japan Exchange Group data. Foreigners, who unloaded more than $ 59 billion from local stocks last year, are expected to return clean buyers in 2021 as the economic recovery resumes globally, making Japan, dependent on exports, attractive.
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“We are in a global risk environment, but the particular strength of Japanese equities speaks to the appetite for business-sensitive stocks and value stocks,” said Shogo Maekawa, JPMorgan Asset Management strategist in Tokyo. “It is possible that foreigners will re-evaluate Japanese stocks.”
Daiwa Securities Group Inc. chief executive Seiji Nakata described the 30,000 mark breach as a “symbolic” event indicating that the Japanese economy has rebounded. The Nikkei 225 will likely head towards the 33,000 mark, it said in an emailed statement.
Like the Dow Jones Industrial Average, the Nikkei 225 is a price-weighted measure. The two most weighted stocks, the operator of Uniqlo Fast Retailing Co. and SoftBank Group Corp., account for almost 19% of the width and therefore have an excessive impact on their movements. Both stocks have risen over the past year, benefiting from the pandemic and Masayoshi Son’s latest record rewards.
The weighted nature of index prices has attracted criticism over the years for not accurately reflecting the state of the Japanese equity market. It is also notable for the lack of some of Japan’s most important stocks, including gaming giant Nintendo Co. and robotics automation specialist Keyence Corp.
Takeo Kamai, chief executive of CLSA Securities Japan Co., said that whether the Nikkei 225 would make a convincing 30,000 mark leak will depend on the performance of US stocks in the coming days as the market national does not have its own catalyst. “The movement feels very driven by futures,” he said.
The S&P 500 ended last week in a historic way maximum before a three-day weekend, totaling more than 1% for the week. Still, Japanese equities have outperformed their U.S. counterparts so far this year, with the Nikkei 225 up 9.6%, doubling the S&P 500’s gain.
– With the assistance of Toshiro Hasegawa and Shoko Oda
(Updates with the latest stock price movements)