Following the US, Japan's stock market surges sharply... Nikkei up 3%

Nikkei Index Touches 37,800 Intraday for First Time in 34 Years Since Bubble Economy...Led by Semiconductor Stocks

The Japanese stock market, which has reached its highest level in 34 years since the bubble economy, continues its unstoppable surge.

According to the Tokyo Stock Exchange on the 13th, the Nikkei 225 index, Japan's representative stock index, closed at 37,963.97, up 2.89% from the previous session, continuing its upward trend for the third consecutive trading day. The increase on this day was the largest in 3 years and 11 months since March 25, 2020. During the session, the Nikkei index briefly surpassed the 38,000 mark. This is the first time it has exceeded 38,000 since 1990.

The rise on this day was led by semiconductor stocks. Optimism grew that Japanese semiconductor stocks have become beneficiaries of the US-China conflict, leading to confirmed buying movements in major semiconductor stocks. Tokyo Electron, which revised upward its expected earnings for the 2023 fiscal year (April 2023 to March 2024) on the 9th, surged 13.33% on this day.

The stock market movement driven by the artificial intelligence (AI) boom also acted as a positive factor. As ARM's stock price in the New York Stock Exchange more than doubled in three trading days, the stock price of SoftBank Group, which holds 90% of this company's shares, also rose. On the Tokyo Stock Exchange, SoftBank Group closed up 6.27% on this day.

Additionally, the fact that major indices in the New York Stock Exchange have recently hit record highs, powered by a rally in technology stocks, also influenced the upward trend of the allied Japanese stock market, according to the Nihon Keizai Shimbun. On the 12th, the Dow Jones Industrial Average, composed mainly of blue-chip stocks, reached an all-time high.

The Nihon Keizai Shimbun stated, "Although some warn of a peak in US stocks, if the perception of a Goldilocks economy (neither overheated nor cooled) continues, the upward trend will also continue," adding, "This is likely to lead to investment money flowing easily into the Japanese stock market."

Attention is also focused on whether the Nikkei index, drawing a steep upward curve, will break its all-time high. The Nikkei index's all-time high was 38,915, recorded at the end of 1989.

Optimists in the stock market analyze that there is room for further gains as foreign investor funds continue to pour in, supported by the weak yen, and corporate export performance improves.

However, the fact that Japan's real economy is moving in the opposite direction to the stock market is a downside risk. Japan's gross domestic product (GDP) has shrunk from $6.3 trillion in 2012 to $4.2 trillion in 2023 due to complex factors such as prolonged yen depreciation and weak consumption. According to Moody's Analytics, Japan's Q4 GDP, to be announced on the 15th, is estimated to have slightly decreased compared to the previous quarter.