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Japan’s benchmark Nikkei 225 stock index is on course for a record year-end closing price, finally surpassing the record it achieved 35 years ago during the bubble economy of the 1980s.
The index ended Friday’s penultimate session 1.8% higher at 40,281 points, led by Toyota Motor Corporation, Sony and Uniqlo’s parent company Fast Retailing. Japan’s last trading of the year will take place on Monday.
Takeo Kamai, head of execution services at CLSA Securities in Tokyo, said the “Santa Rally” of deal closing news and the prospect that major Japanese companies will act more in line with investors’ interests are driving the market. He said he did.
“With the recent news of the mega-merger between Honda and Nissan, and the news of increased shareholder returns at Toyota, Japan’s No. 1 market capitalization company, I wonder if talk of “Buy Japan” will reignite next year. There may be investors who are cautiously targeting opportunities,” Kamai said. .
Before this year, the Nikkei’s highest point was just under 39,000 points, reached in its final session in 1989, after years of investor euphoria about the strength of Japanese companies and the value of Japanese wealth.
Subsequently, as Japan’s speculative mania came to an end, domestic and foreign investors began to view the Japanese stock market with deep skepticism after decades of economic stagnation.
However, in 2024, stock prices finally surpassed bubble-era levels thanks to a sustained rally driven by corporate stock buybacks, activist funds, and individual investors.
The Nikkei Stock Average soared to an all-time high of more than 42,000 points in July, and the broader TOPIX index, which includes many mid-sized companies, also surpassed its bubble-era high in the same month.
Analysts said this year’s rally was all the more surprising because it was not driven by foreign investors, historically the biggest determinant of momentum in Japanese stocks.
Foreigners were net sellers of about $32 billion in spot stocks and futures in 2024, mostly in the second half of the year, according to the Tokyo Stock Exchange operator.
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Since the start of the year, the Nikkei Stock Average has risen more than 21%, the world’s largest It was one of the top performing major indexes. -This is the highest value ever for the June-September period.
Traders said a year-end closing price above $40,000 would be a powerful symbol for retail and institutional investors as the government encourages households to put their savings into stocks and other investments. said.
Since the beginning of 2024, individuals have been allowed to deposit more savings into Japanese personal savings accounts. This provides long-term tax protection and turned out to be more attractive than analysts expected.