Nikkei 225 tops 30,000 for first time since 1990
Japan’s Nikkei 225 Stock Average topped 30,000 for the first time since August 1990, as it continued its charge back up through levels not seen since the collapse of the bubble economy.
The gauge rose 1.9% to close at 30,084.15 on Monday, amid signs an economic recovery is intact at home and hopes of progress in US stimulus talks. While equities globally have hit new heights in recent months, the Nikkei 225 still needs to gain almost 30% to surpass its record of 38,915.87. That was reached in the final trading session of 1989, before the index went on to lose more than half its value in three years after the economic bubble burst.
Japanese equities have been staging a recovery after hitting a low in 2012 in the wake of the earthquake disaster in the previous year. Former prime minister Shinzo Abe’s efforts to revitalize the economy and boost corporate value through better governance since he took office in 2012 have backed share price gains prior to this year’s rally.
The brief breach of the 30,000 shows that “all sorts of investors are jumping in to buy Japanese equities with a totally bullish view,” said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute Co.
That view was affirmed Monday when Japan announced that gross domestic product grew an annualized 12.7% from the prior quarter in the three months through December, as exports continued to rebound and government stimulus fueled consumer spending despite the coronavirus.
The continued economic growth is one factor contributing to the strength in Japanese equities, according to Nikko Asset Management Co. chief global strategist John Vail, who hailed strong export and private capex data. Japan’s reasonable valuations compared to those during the bubble era, as well as improved profits and shareholder returns, are also strengths, he said.
“There are always doubters who perennially point to demographics,” said Vail, “but such has not prevented tremendous growth in corporate earnings, including such from Japan’s extensive global manufacturing bases.”