After breaking a 34 year high record just last month, the Nikkei 225 index set a new record shortly after opening on Monday: breaking the 40000 point mark for the first time
Market data shows that the Nikkei 225 index opened nearly 1% higher on Monday, jumping above the 40000 point mark, with the latest trading around 40278 points. Technology stocks, including chip manufacturing equipment manufacturer Tokyo Electronics, performed the best during the trading session, and these stocks have continuously helped drive the stock index up in the past year.
The Tokyo Composite Index also rose in the day, with the latest report at 2719.69, but it is still about 6% lower than the record high set by Japan before the foam of asset prices burst more than 30 years ago.
The high opening of the Nikkei and Tokyo Composite Index today has to some extent continued the strong performance of the US stock market last Friday. At that time, the US consumer data increased people's expectations that the Federal Reserve may lower interest rates as early as June, which was favorable for the risk appetite sentiment in the global market.
Daiju Aoki, Regional Chief Investment Officer of UBS SuMi Trust Wealth Management in Tokyo, said that when a market reaches record levels, it often falls into range fluctuations. The continuous breakthrough of the Nikkei 225 index above 40000 points indicates that many investors, especially overseas investors, are still optimistic about the Japanese stock market.
The Nikkei 225 index just surpassed its historic high set in the first year of Heisei (1989) last month, driven by rising shareholder returns, a weakening yen, and rising corporate profits, prompting global investors to flock to the Japanese market. In recent years, Warren Buffett's increase in holdings in the five major Japanese companies has also strengthened people's confidence in the Japanese stock market.
From the performance of major stock indices worldwide, the Nikkei 225 index led developed markets with a growth of about 17% in the first two months of this year.
After reaching a new milestone on February 22nd, the rise of the Nikkei 225 index was briefly suppressed as some investors chose to take profits, and some analysts were surprised by the speed of the stock market's rise. However, with the continuous influx of investors thereafter, the Nikkei 225 index quickly regained its momentum.
Many foreign investors are still optimistic about the Japanese stock market at the moment. BlackRock, the world's largest asset management company, and Orient Asset Management, Europe's largest asset management company, both predict that profit growth and changes in corporate governance will drive the Japanese stock market to maintain this strong momentum.
The Tokyo Stock Exchange is currently encouraging companies to release reports on plans to increase stock valuations. Some companies have recently announced stock buybacks and increased dividends. The number of management acquisitions is also increasing, and proactive investors are also increasing their buying power.
Outside of the finance sector, about one-third of Nikkei listed companies have net cash surplus, which means they have more cash than debt, supporting activist investors and the Tokyo Stock Exchange's initiative to increase shareholder returns - a figure roughly twice that of companies on the S&P 500 index.
Charu Chanana, a market strategist at Singapore's Shengbao Capital, pointed out that "the Nikkei 225 index at 40000 points is undoubtedly a key psychological barrier that may create some resistance and volatility in the market. However, when structural factors remain favorable and the yen continues to weaken, this may be more like a bullish signal rather than fueling any concerns about overbought Japanese stocks."
On the news front, there were also some uplifting rumors in the Japanese market over the weekend. According to sources cited by Kyodo News Agency on Saturday, the Japanese government is discussing officially announcing that the country's economy has successfully overcome deflation.
According to insiders, the Japanese government will carefully study the results of this spring's labor negotiations and inflation prospects to determine whether Japan has the conditions to declare a complete escape from deflation. Analysts point out that although this formal statement is only symbolic, it is expected to mean that a major growth bottleneck for the Japanese economy has been eliminated.