The Nikkei Stock Average has been rising rapidly since this year. The price increase over the past month and a half has exceeded 5,000 yen.
Market participants and economists point out various factors as to why stock prices continue to rise. We have summarized 8 points in a compact manner.
table of contents
1 American stock price
2 Strong performance of Japanese companies
3 Management with stock prices in mind
4 A weak yen provides a tailwind for exports
5 Japanese stocks feel cheap due to the weak yen
6 Shift of funds from China
7 Bank of Japan’s stance on continuing easing
8 Expectations due to NISA expansion
Open table of contents
table of contents
table of contents
1 American stock price
2 Strong performance of Japanese companies
3 Management with stock prices in mind
4 A weak yen provides a tailwind for exports
5 Japanese stocks feel cheap due to the weak yen
6 Shift of funds from China
7 Bank of Japan’s stance on continuing easing
8 Expectations due to NISA expansion
1 American stock price
First, there is the impact of high stock prices in the United States. In the New York market, the Dow Jones Industrial Average continues to hit record highs against the backdrop of the strong American economy and corporate performance.
Additionally, as expectations rise for the performance of semiconductor and IT companies listed on the NASDAQ market, stock prices in related industries are rising in the Tokyo market as well.
2 Strong performance of Japanese companies
The strong performance of Japanese companies is also a factor in the rise in stock prices. In the financial results of companies announced this year, a number of companies in a wide range of industries improved their performance due to factors such as the weaker yen and progress in passing on product prices.
3 Management with stock prices in mind
It has also been pointed out that one factor behind the rise in stock prices is the growing expectation that Japanese companies will implement reforms with an eye on market evaluations.
The background to this is that the Tokyo Stock Exchange is asking companies to manage their businesses with an awareness of capital costs and stock prices.
Despite the current situation of high stock prices, a number of companies are launching so-called ``share buybacks'' as a measure to return profits to shareholders.
4 A weak yen provides a tailwind for exports
The continued depreciation of the yen is also a tailwind for Japanese stocks.
The yen exchange rate was trading at 141 yen to the dollar at the end of last year, but the yen has been depreciating further this year, and as of 5pm on the 19th of this month, the yen was trading at around 151 yen to the dollar. (*The price has dropped to 149 yen 97-99 sen).
As the yen weakens, stock prices of export-related companies such as automobiles and machinery are pushed up by expectations for improved business performance.
5 Japanese stocks feel cheap due to the weak yen
In the Tokyo stock market, active buying orders from foreign investors are driving the rise in stock prices, but the depreciation of the yen has made Japanese stocks seem undervalued for foreign investors compared to the dollar and euro. is getting stronger.
6 Shift of funds from China
Some point out that the shift of funds from China is leading to high stock prices in Japan.
The view is that foreign investors are moving funds from China, where the economy is slowing, to Japan.
As of the end of last month (January), the total market capitalization of the stocks of companies listed on the Tokyo Stock Exchange exceeded that of China's Shanghai Stock Exchange for the first time in about three and a half years.
7 Bank of Japan’s stance on continuing easing
A sense of security regarding monetary policy is also supporting the strong market performance.
There are concerns among market participants that if the Bank of Japan lifts negative interest rates and raises interest rates, it will lead to a decline in stock prices. A series of statements that they would maintain an accommodative financial environment even if interest rates were lifted provided reassurance to investors and caused stock prices to rise.
8 Expectations due to NISA expansion
There are also expectations that NISA, a preferential tax system for individual investors, will be expanded from January this year.
There is also the view that the base of individual investors is expanding and there is a movement to make new investments in stocks and other areas.