On February 13th, the Nikkei 225 index broke through 38000 points during trading, continuing to reach a new high in nearly 34 years, with an increase of over 3% at one point.
At present, the Nikkei 225 index is only one step away from its historical high of 38957.44 points.
Explosive rise in Japanese stocks
The Japanese stock market opened high throughout the day, closing up 2.89% at 37963.97 points, reaching a new high since 1990 and briefly breaking through the 38000 point mark at the end of the day. The Tokyo Composite Index rose 2.1% to 2612.03 points, with nearly 1600 out of 2152 stocks in the index rising.
Data shows that since 2024, the Nikkei 225 index has accumulated an increase of over 13%.
In terms of individual stocks, SoftBank Group rose and fell, rising more than 6%, with a cumulative increase of over 28% in the past three trading days; Tokyo Electronics stock price surged by over 13%; Mitsubishi Corporation rose more than 4%, Toyota Motor rose 4%, and Sony rose nearly 4%.
Tokyo Electronics contributed the most to the increase in the Tokyo Composite Index. Previously, the chip equipment manufacturer predicted that its revenue for the fiscal year ending in March would reach 445 billion yen (approximately 21.4 billion yuan).
SoftBank Group expanded its gains due to the explosive rise of its Arm Holdings Plc. Arm's stock price surged 29.2% during trading hours in New York on Monday, almost doubling since its listing in September last year. It is worth mentioning that ARM's current valuation has significantly surpassed SoftBank, even approaching twice the latter.
In addition, the largest heavyweight stock in the Nikkei 225 index, Uniqlo's parent company, Fast Retailing, rose 1.13%, while Japan's largest company by market value, Toyota Motor, rose 4%, and the second largest, Sony, rose 3.5%.
Institutions claim that Japanese stocks may continue to rise
In the latest research report released on February 9th, Masashi Akutsu, Chief Japanese Equity Strategist at Bank of America, analyzed three main reasons driving the "re acceleration" of the Japanese stock market. Akutsu believes that the recent accelerated rise in the Japanese stock market is mainly driven by three factors: positive signals from the Bank of Japan, strong performance in technology stocks, and positive changes in companies.
Guosen Securities stated that the Indian stock market may continue to improve in 2024, while the Japanese stock market may outperform India in terms of cost-effectiveness in 2024. The Bank of Japan's monetary policy is expected to shift from loose to neutral in 2024, with slight fiscal tightening but long-term support for emerging industries, especially green industries, benefiting. Profit supports the upward trend of Japanese stocks, with a focus on industries related to high value-added industries. Although valuation factors are expected to be dragged down by a slight tightening of monetary policy, the premise of interest rate hikes is recovery, and the economic fundamentals advantages of moderate inflation and low unemployment rates are expected to continue, supporting the improvement of Japanese stocks.
Baosheng Switzerland pointed out that due to a possible shift in Japan's monetary policy in 2024, the outlook for the Japanese market is good. The institution has seen many opportunities in the Japanese stock market, in addition to cyclical opportunities, because Japanese companies are undergoing reforms, which can lead to higher profitability and investment value after a significant stagnation in capital returns, and attract more capital inflows.
Based on various factors, we have raised the rating of the Japanese stock market to overweight. We believe that the recent shift of the Japanese economy from deflation to inflation is beneficial for the development of businesses and even the broader economy. In addition, the Tokyo Stock Exchange has implemented multiple important reforms to improve governance, increase efficiency, and make corporate valuations more attractive. Finally, with further inflows of funds from domestic and foreign investors in Japan, asset prices will be further pushed up Swiss Baosheng said.