For the third day, the record was broken, the highest in 34 years.
Nvidia U.S. records all-time highs every day
Japanese semiconductor-related stocks also rose accordingly.
Expectations are high for exports to lead due to prolonged weak yen
Japan’s representative stock index, the Nikkei Stock Average, broke its highest record in 34 years. It broke the 35,000 yen level for the first time since February 1990, when Japan’s bubble economy began to collapse.
On the 11th, on the Tokyo Stock Exchange, the Nikkei stock average closed at 35,049.86 yen, up 1.77% (608.14 yen) from the previous day. The Nikkei Stock Average has been breaking its highest record every day for the past three days, exceeding the 34,000 yen level for the first time in 34 years on the 10th.
The Nikkei stock average, which fell to around 31,000 yen in November last year, is showing an upward trend, influenced by the strong New York stock market that led to the year-end ‘Santa Rally’. Ikuo Mitsui, a fund manager at Aizawa Securities, predicted to Jiji News Agency, “As the possibility of an early U.S. interest rate cut weakens and corporate performance improves, the price could rise to the 39,000 yen range.”
The driving force behind the rise in the Japanese stock market is by far semiconductor-related stocks. As the U.S. Nvidia stock price, which is considered the biggest beneficiary of generative artificial intelligence (AI), is hitting record highs every day, related stocks in Japan are also rising.
A representative example is Tokyo Electron, Japan’s largest semiconductor equipment company, which rose 2.74% on this day. Tokyo Electron’s market capitalization exceeded 12 trillion yen (about 108 trillion won) at the end of last year for the first time, and its stock price rose 11 times compared to 10 years ago. Other semiconductor-related stocks, such as semiconductor equipment company Advantest (1.63%) and Sony Group (3.54%), also rose on this day.
There are also high expectations for export stocks to improve their performance due to the prolonged low yen, with the yen-dollar exchange rate staying in the 140 yen range. Representative examples include automobile stocks such as Toyota Motor Company (3.61%) and general trading companies such as Itochu Corporation (4.50%).
The introduction of the new small investment tax exemption system (NISA), which began this year, is also supporting the rise in stock prices. The new NISA, which was reformed 10 years after its introduction, has simplified the product structure and increased tax savings. Then, as individual investors poured a lot of money into NISA, the stock market became abundant.
In addition, it is pointed out that as the record for the highest price after the bubble economy is broken day after day, investors’ impatience that ‘we have to buy stocks now’ has become stronger. The Nihon Keizai Shimbun analyzed, “With the market soaring every day, the fear that ‘you shouldn’t buy late’ spread, fueling the bull market.”
There are many voices in Japan who expect the current upward trend to continue for the time being. Kazunori Datebe, a Japanese stock strategist at Goldman Sachs, said in a Nikkei interview, “There is still a lot of room to buy (Japanese stocks).” This is because major fund investors investing in global stock markets are still investing less in Japanese stock market stocks compared to those in the U.S. and Europe.
In Japan, it is believed that the movements of individual investors will determine the direction of the stock market in the future. This is because in Japan, going through the ‘lost 30 years’ after the collapse of the bubble economy, there is a strong tendency to sell stocks and realize profits as soon as they rise even slightly. As stock prices rose briefly in 2013 when ‘Abenomics’ centered on financial easing was implemented, individual investors in Japan began selling close to 9 trillion yen (approximately 81 trillion won).
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.