Nikkei parties like it's 1989; scales record high
By Ankur Banerjee and Rae Wee
SINGAPORE (Reuters) — Japanese stocks raced to a record peak on Thursday, breaking levels last seen in 1989 during the halcyon days of the bubble economy, as cheap valuations and corporate reforms lure foreign money looking for alternatives to battered Chinese markets. The Nikkei share average rose about 2% to 39,000 points, above the previous intraday record high of 38,957.44 points touched on the final trading day of 1989. On that day, the benchmark index closed at 38,915.87.
The 34 years it has taken to regain its footing is a record, too, for a major market and is a decade longer than Wall Street took to recoup losses from the 1929 crash and Great Depression.
«It is hard to overstate the psychological impact to Japanese people of the Nikkei returning, since a generation has never seen that level,» said Richard Kaye, a Japan-based portfolio manager at Comgest.
«The magnetism of the market could draw in unforeseen amounts of domestic liquidity,» he said.
The index is up almost 17% this year after surging 28% in 2023, when it was the best performing Asian major bourse. The tech-heavy Nasdaq, by comparison, soared 43% last year and is up 6% so far in 2024.
The Nikkei's rally has defied a recession in Japan, wars in Europe and the Middle East, a global inflation shock and rising rates worldwide. Trade exposure has helped insulate it from deteriorating domestic demand while a weak currency has boosted exporters' earnings.
The milestone also finally draws a line under decades of lacklustre performance that had kept global investors away.
Corporate governance changes in Japan are driving buybacks and unwinding cross-holdings, and foreigners are now spurring the rally with the likes of large
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