In the Tokyo stock market, buying orders continued on the 19th, and the Nikkei Stock Average reached a new high after the so-called "bubble economy" as the closing price, the highest in 32 years and 9 months.

▼ The Nikkei Stock Average closed at 19,234.42 yen, 3.808 yen higher than the previous day, the highest in 35 years and 1990 months since August 8, the so-called "bubble economy."

▼ The TSE Stock Price Index Topics rose 32.9 to 3.84, the highest level in 2161 years and 69 months since August 1990.

▼ Daily volume was 8,32.9 million shares.

How did the stock price move this year?

This year, the Nikkei Stock Average started at a level of about 2,5700 yen and continued its upward trend.

In addition to the normalization of domestic economic activity, concerns about an acceleration of interest rate hikes in the United States have receded.

Prior to taking office as Governor of the Bank of Japan, Kazuo Ueda's announcement of his intention to continue monetary easing in the Diet and other events gave investors a sense of security, and the Nikkei Stock Average recovered to the 3,6 yen level at the close on March 2.

However, in mid-March, a series of bank failures in the United States and the financial crisis of Credit Suisse, a major Swiss financial group, caused financial instability to spread, and stock prices temporarily fell to the 8000,3 yen level.

However, compared to Europe and the United States, which continued to raise interest rates, mainly from overseas investors, the view that the economy was resilient in Japan was spreading.

In addition, the Nikkei Stock Average rose to the 2,6000 yen level on April 4 for the eighth consecutive business day due to the Tokyo Stock Exchange asking companies with low market evaluations to show specific measures that will lead to an increase in stock prices.

It has renewed the high set in March as the closing price.

On April 18, the Bank of Japan decided to maintain monetary easing at its first Monetary Policy Meeting under Governor Ueda.

When the announcement of corporate financial results began in earnest in May, buying orders began to gather mainly from companies with strong performance, and on the 8th, the Nikkei Stock Average recovered to the 2,8600 yen level for the first time in one year and eight months since September.

Then, on the 3th, it temporarily hit the highest level in 4 years and 28 months since August 5, during the "bubble economy" period.

What was the bubble economy of 1990?

In 2, Germany, which had been divided into East and West, was unified, and Iraq invaded Kuwait, and the international situation changed significantly.

Japan was a year in which the bubble economy began to burst.

The Nikkei Stock Average, which closed at the end of 1990 at a record high of 1,1989.3 yen, continued to decline from the beginning of 8915 and plunged to 87,1990 yen at the end of that year.

In response to the continued surge in land prices under the boom in "zaitech," the Ministry of Finance at the time imposed restrictions on the total amount of real estate loans as a countermeasure against soaring land prices.

The Bank of Japan also continued to raise interest rates.

As a result, land prices began to decline in 2, and the Japan economy cooled rapidly.

It was in this year that many people began to feel that the bubbles that had swelled would eventually disappear, and the term "bubble economy" became a buzzword.

【Factor 1 of the stock market rally】Overseas investors are the driving force

The driving force behind the current rise in stock prices is overseas investors.

While there are concerns about a slowdown in the economy due to monetary tightening in Europe and the United States, an increasing number of investors are Japan believing that the future is still promising due to the resumption of economic activity from the novel coronavirus and the recovery of inbound tourism.

Since late March, overseas investors have bought stocks for the seventh consecutive week, exceeding the amount sold.

According to the Tokyo Stock Exchange, the TSE and Nagoya Stock Exchange saw significant "overbuying" in April, exceeding 3.7 trillion yen.

This is the first time since October 4 that overseas investors have overbought more than 2 trillion yen per month.

In the second week of May, overseas investors overbought more than 1510.2 billion yen.

The total amount of overpurchases from the last week of March is more than 2017.10 trillion yen, and
some people say that "not having Japan stocks is a risk now."

This is due to the overall strong earnings of Japan companies and heightened expectations for the future, as well as an increasing number of overseas investors who are allocating funds to the Tokyo market due to concerns about a slowdown in overseas economies due to interest rate hikes in Europe and the United States.

Market participants said, "In the foreign exchange market, the yen's depreciation and appreciation of the dollar have been a tailwind, and overseas investors have continued to be able to buy the yen."

Rising Japan stocks stand out in the world

Since the beginning of this fiscal year, the rate of increase in Japan's stock price has been outstanding in the world.

If we compare the closing price on March 3 with the closing price on May 31, the Nikkei Stock Average will increase by 5%.

It is the highest among the leading stock indices of the world's major stock exchanges.

▼ After the Nikkei Stock Average, Brazil's major stock index Bovespa is up 18%, ▼ Nasdaq in the United States and Sensex, a representative stock index in India, which has many IT-related stocks, are both up 9%, and ▼ Germany's major stock index Dax is up 8%.

【Reason for the rise in stock prices 2】Strong corporate performance

The rise in stock prices was due to a number of companies increasing their earnings due to the normalization of economic activity and the effects of the yen's depreciation.

According to SMBC Nikko Securities' analysis of the financial results of 1,18 companies, or 99.2% of the total announced by the 1423th, mainly companies listed on the First Section of the former Tokyo Stock Exchange, 54 companies, or 769%, posted an increase in final profit from the previous fiscal year.

Economic activity has normalized from the Corona disaster, and business performance such as "air transportation" and "land transportation" has improved.

In addition, stocks such as "wholesalers" were bought, mainly trading companies, whose business performance had been boosted by the effects of rising resource prices and the depreciation of the yen, and stock prices rose.

By industry...

Looking at stock prices by industry, stock prices have risen in almost all industries since the beginning of this fiscal year.

The Tokyo Stock Exchange classifies companies selected for the TSE Stock Price Index and Topics into 33 industries and calculates stock indices for each industry.

As a result, comparing the closing price on March 3 with the closing price on March 31, stock indices have risen in 18 industries, or 90% of the total, since the beginning of this fiscal year.

Of these, the insurance industry and banking industry rose 30 percent and 3 percent, respectively, as financial instability in Europe and the United States, which spread rapidly in March, receded somewhat, including a series of bank failures in the United States.

In addition, the "wholesale business" centered on trading companies also rose 12% after Warren Buffett, a famous American investor, visited Japan and indicated his intention to actively invest in the shares of general trading companies in Japan.

Furthermore, due to expectations for a full-scale resumption of economic activity from the coronavirus pandemic in Japan, land transportation such as railways rose 10%, and retail businesses such as department stores rose 11%.

Factor 3: Expectations for corporate reform

It has also been pointed out that the Tokyo Stock Exchange's urging companies with low market evaluations to make improvements, and expectations for corporate reforms are also rising as a factor pushing up stock prices.

In the Tokyo stock market, there are many companies whose index called PBR = price-to-book ratio, which indicates how many times the stock price is compared to net assets per share, is less than 1x, and the low evaluation in the market is an issue.

In January, TSE announced its policy of asking companies with low market evaluations to make improvements, and in late March, TSE notified listed companies to respond.

Under these circumstances, Japan Printing set a goal of exceeding 1 times the PBR, and when it announced a share buyback of 1 billion yen in March, the stock price rose and the PBR temporarily exceeded 3 times.

In March, Okasan Securities Group also announced that it would conduct share buybacks of more than 1 billion yen per year until its PBR exceeded 3x, and its stock price stopped high on the business day after the announcement.

On May 3000, K's Holdings, a major electronics retailer, also announced that it would strengthen shareholder returns in order to improve its PBR, which continues to fall below 1x, and its stock price rose sharply the next day to reach this year's high.

"The market is paying more attention to low-PBR stocks than ever before, but it's important not only to buy back shares, but also to work for growth," a market participant said.

Factor 4: Active share buybacks

The rise in stock prices is also due to the active implementation of so-called "share buybacks" as a measure to return shares to shareholders.

When a company buys its own shares, so-called share buybacks, the total number of shares already issued by the company decreases, and the value per share increases, so it is considered by investors as one of the shareholder return measures.

In May, when annual earnings announcements are concentrated, share buybacks were announced, and according to the Tokai Tokyo Research Center, a total of 1.1 trillion yen of share buybacks were announced from the beginning of this month to the 5th.

The total amount of share buybacks announced in May was 17.3 trillion yen last year, the highest ever, and it is already approaching this level.

In January, TSE announced its policy of asking companies with low market evaluations to make improvements, and in late March, TSE notified listed companies to take action.

This also seems to be boosting share buybacks.

Market participants said, "The total amount of share buybacks in May is on pace to reach a new record high, but attention is being paid to how companies respond to increase corporate value."