Recently, as the Japanese stock market continued its upward trend every day, the Nikkei Stock Average, the representative stock index, exceeded the 38,000 yen level during trading on the 13th. There is analysis that it is on the verge of breaking the all-time high (38,915 yen) set in December 1989.
At the Tokyo Stock Exchange on the 13th, the Nikkei index closed at 37,963.97 yen, up 1,066.55 yen (2.89%) from the previous trading day. The increase was the largest in 3 years and 11 months since March 2020. It is more than double the KOSPI increase (1.12%) on this day. At one point during the day, it exceeded the 38,000 mark. Tokyo Electron, a leading semiconductor company, jumped 13.33% on this day. The stock price of Softbank Group, which owns British semiconductor design company ARM, also rose 6.27%.
The recent rise in the Japanese stock market has been so steep that it has been called a ‘melt up’ (short-term overheating phase). The Nikkei 500 average stock price (3,281.80 yen), which is calculated based on the top 500 stocks by trading volume and market capitalization, has already broken its all-time high. The Nikkei index targets the top 225 stocks.
The reason for this upward trend is, first of all, the upward trend of the U.S. stock market. On the 12th (local time), the Dow Jones Industrial Average of the New York Stock Exchange also rose 0.33%, breaking its all-time high.
In the fourth quarter of last year (October to December), the U.S. economic growth rate recorded an annual rate of 3.3%, significantly exceeding Wall Street’s forecast (2.0%). As expectations for a soft landing for the U.S. economy grow, the Japanese stock market is also benefiting from this. A large number of foreign investors leaving the Chinese stock market due to concerns about the insolvent real estate market and flocking to Japan also stimulated the rise in stock prices.
The recent announcement by the Bank of Japan, Japan’s central bank, that it will stick to its monetary easing policy for the time being even if it lifts its negative (-) base interest rate policy in the near future also had a positive impact on the stock market. As concerns about austerity have subsided, the flow of investors toward the stock market has continued. The prolonged low yen, which is good news for export companies, continues. On this day, the yen-dollar exchange rate was traded at 149.50 yen per dollar in the Tokyo foreign exchange market.
Many experts believe it is only a matter of time before the Nikkei index hits an all-time high. According to SMBC Nikko Securities, net profit increased in 537 of the 957 listed companies that announced their performance, or 56%. Shingo Ide (井出真吾), chief stock strategist at Nissei Basic Research Institute, said, “During the bubble economy (1980s), stock prices were more than four times higher than the appropriate level calculated based on corporate performance, but are currently at an appropriate level.”
On the 13th, the KOSPI and KOSDAQ indices also rose simultaneously. KOSPI ended trading at 2,649.64, up 1.12% from the previous trading day, and KOSDAQ closed at 845.15, up 2.25%.
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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.