Japan's Nikkei share average saw a notable increase on Friday, largely driven by gains in the semiconductor sector. This upward trend contributed to a record-breaking rise in terms of points for the fiscal year, an achievement largely attributed to a surge in foreign investments. The presence of foreign investors was a key factor in this remarkable performance, indicating a growing international confidence in the Japanese stock market.
During the month, the Nikkei index consistently set new record highs, an occurrence not witnessed since the pinnacle of Japan's bubble economy back in 1989. This exceptional growth, which began on February 22, surpassed historical benchmarks, signifying a robust recovery and renewed vigor in the Japanese stock market. These highs reflect a positive market sentiment and the resilience of the Japanese economy in the face of global financial fluctuations.
The rally was primarily fueled by substantial foreign investments, drawn by the weakening yen and expectations that the Bank of Japan would persist with its policy of monetary easing. The influx of foreign capital suggests a strong belief in the future stability and growth potential of the Japanese economy. The anticipation of continued loose monetary policy by the Bank of Japan also added to this optimism, as it indicates a favorable environment for investment and growth.
The Nikkei index's extraordinary ascent over the fiscal year, with a rise of 12,328 points, is unparalleled in its history. This increase, amounting to a 44% growth rate for the year, is the most significant since the fiscal year that ended in March 2021. Such a dramatic rise underscores the robustness of the Japanese stock market and the positive outlook of investors regarding its future trajectory.
On the last trading day of the week, the Nikkei closed with a 0.5% gain, reaching 40,369.44, and partially recovering from the losses of the previous session. This rebound highlights the market's volatility and the complex interplay of various factors that influence stock prices, including economic indicators, global market trends, and investor sentiment.
Fumio Matsumoto, chief strategist at Okasan Securities, pointed out that although there is a sense of caution among investors about potential interventions in the currency market, the overall sentiment is that the depreciating yen is beneficial for Japan's stock market as we read in Reuters. This observation indicates a nuanced understanding among investors, where currency fluctuations are seen as both a risk and an opportunity, influencing investment strategies.
This week, the yen fell to a 34-year low against the dollar, prompting an emergency meeting by local authorities. This development suggests Tokyo is considering intervening in the currency market, an action that could have significant implications for the economy and the stock market. The depreciation of the yen and the potential for government intervention highlight the complexities of currency management in a globalized economy.
The Japanese yen eventually stabilized at 151.40 against the dollar, reflecting the dynamic and responsive nature of currency markets. This stability, after a period of decline, indicates the potential effectiveness of market interventions and the influence of global economic factors on currency values.
In the semiconductor sector, notable companies Tokyo Electron and Advantest experienced growth, with their stocks rising 0.79% and 1.85% respectively. This growth in the semiconductor industry is indicative of the broader technological advancements and the increasing demand for semiconductor products globally.
The real estate sector saw a significant upswing of 1.96%, resulting in a 16% increase over the month, the most pronounced growth among all sectors. This was bolstered by a recent government survey that showed land prices in Japan increasing at the fastest rate in 33 years in 2023. The robust performance of the real estate sector reflects the underlying strength and confidence in the domestic property market.
The optimism surrounding the Bank of Japan's cautious approach to raising interest rates supports the bullish sentiment in the stock market, according to Matsumoto from Okasan Securities. This perspective suggests that investors are reassured by the central bank's gradualist approach, which is seen as a stabilizing factor for the economy and the financial markets.
The broader Topix index also experienced gains, closing 0.61% higher at 2,768.62 on the final trading day of the week. This rise in the Topix, which encompasses a wider range of companies than the Nikkei, indicates a broad-based confidence in the Japanese stock market and its diverse sectors.
29.03.2024
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