Over 20% Increase This Year
Sharp Rise in Completed Vehicles, Semiconductor Equipment, and Trading Companies
Due to the effect of the weak yen, Japan's major stock indices, TOPIX and Nikkei 225, recorded their highest levels in 33 years.
Bloomberg reported on the 26th (local time) that Japan's major stock indices have risen more than 20% since the beginning of this year.
This figure surpasses the stock indices of other Asian countries and is attributed to the depreciation of the yen against other major currencies. The export growth effect caused by the weak yen led to a surge of over 33% in the stock indices tracking Japanese automakers and electronics companies. The Bank of Japan (BOJ) supported this momentum by showing no haste in changing its negative interest rate policy stance.
Although the yen has been strengthening since early November, its value remains low compared to major currencies, and Japanese corporate earnings have become less sensitive to exchange rate fluctuations, suggesting that the Japanese stock market may continue its bullish trend, Bloomberg analyzed. According to data compiled by the Tokyo Stock Exchange, foreign investors showed net selling only for three months up to November this year.
Masashi Akutsu, senior analyst at Bank of America Tokyo, said, "Investors outside Asia, including the US, Europe, and the Middle East, are also interested in Japanese stocks," adding, "If investors are confident that the Japanese economy will improve, they will upgrade their ratings, which will lead to capital inflows aligned with fundamentals."
Notable sectors with significant gains this year include automakers, semiconductor equipment, and trading companies. Last month, the yen hit a yearly low of 151.91 yen per dollar, greatly boosting export profits for Japanese automakers due to the weak yen effect. Toyota, Japan's largest company by market capitalization, recorded a 40% increase in its stock price this year. The rise in semiconductor equipment manufacturers' stock prices was also remarkable. Screen Holdings' stock surged 172% this year. Advantest and Renesas Electronics also more than doubled.
Japan's five major general trading companies (Mitsubishi Corporation, Mitsui & Co., Sumitomo Corporation, Marubeni Corporation, and Itochu Corporation) rose more than 35% after Warren Buffett, the "investment genius" and chairman of Berkshire Hathaway, announced an increase in his stake last April. The TOPIX wholesale trade index, which includes these companies, jumped more than 37% this year.
Meanwhile, among the 33 sub-indices of TOPIX, pharmaceutical companies were the only ones to decline. Sumitomo Pharma fell more than 50%, and Eisai Pharmaceutical's stock dropped 20% after a failed clinical trial.
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