Premiere: The major index of the Tokyo Stock Exchange has crossed the threshold of 40,000 points

The reference index of the Tokyo Stock Exchange, Nikkei 225, closed yesterday's session above 40,000 points, for the first time in history, Reuters reports, adding that the Japanese market continues its upward trend fueled by corporate governance reform, as well as solid valuations of companies.

In a context where the shares of technology companies are rising strongly, influenced by the evolution of the American market, in this sector, the major Nikkei 225 index ended yesterday's session with an increase of 0.5%, reaching 40,109.23 points. During yesterday's session, the Nikkei 225 rose to 40,314.64 points, a new "intraday" record. The previous "intraday" record was set on Friday: 39,990.23 points.

"Foreign investors are leading the way when it comes to buying Japanese stocks and many seem to be investing based on a medium to long-term perspective," says Masahiro Ichikawa, an analyst at Sumitomo Mitsui DS Asset Management, according to Reuters, adding: "I think that the market will continue to grow".

For his part, Kensuke Niihara, investment director for Japan at State Street Global Advisors, says quoted by the Japan Times: "The growth of the Japanese market, observed in recent weeks, is a crowning of the favorable macroeconomic conditions and the structural reforms that have been in the works for years".

Quoted by the same source, Daishi Sasaki, director at Mizuho Securities, states: "When the Nikkei index reaches a milestone such as the 40,000-point level, we believe that this momentum is a positive factor for Japan and its market."

Hirofumi Suzuki, chief currency strategist at Sumitomo Mitsui Banking Corp., says the resilience of the U.S. economy is among the factors contributing to the Japanese market's performance, with positive knock-on effects for Japan's export sector.

Some analysts forecast that Japanese stocks could rise further this year amid long-term changes in corporate behavior, with one forecast showing a Nikkei 225 advance of as much as 43,000 points, according to a Reuters poll published on February 22.

• Renesas Electronics - yesterday's top performer, at the Tokyo Stock Exchange

The shares of Japanese technology companies were boosted yesterday by the fact that the American stock indices S&P 500 and Nasdaq closed the session on Friday at record levels. For example, shares of Japanese chip test equipment maker Advantest Corp. chip equipment maker Tokyo Electron Ltd. rose 3.7% to 7,380 yen yesterday - up 2.4% to 39,290 yen. Also yesterday, shares of semiconductor manufacturer Renesas Electronics Corp. they gained 4.9% to ¥2,715. The company was yesterday's top performer on the Tokyo Stock Exchange.

Since the beginning of the year, the Nikkei 225 index has increased by 20.5%, and in the last year, by 42%. Over the course of 2023, the Nikkei 225 has registered an increase of 28%, this being the best annual performance in the last ten years, according to CNN.

• February 2024 brought the first record high for the Nikkei 225 in 34 years

Last month, the Nikkei 225 index surpassed the all-time high it had reached in December 1989. The record on February 22 was 39,098.68 points, and the one on December 29, 1989, was 38,915.87 points.

After setting a record on February 22, supported by the technology sector - boosted by the release of financial results from US giant Nvidia Corp. -, Morgan Stanley strategists said according to CNN: "This is a moment that reflects the recognition by investors that a real durable bull market has been going on in Japan for some time, and we are likely to see further gains going forward." According to them, a particular reason for the optimism on the market is the solid earnings of the companies.

We remind you that the Tokyo Stock Exchange returned to the first place in Asia, in terms of market capitalization, as significant funds left the Chinese stock market, moving towards Japan and India, according to data from the World Federation of Stock Exchanges (World Federation of Exchanges - WFE). They show that at the end of January, the total capitalization of shares listed on the Tokyo Stock Exchange, in dollars, surpassed that of the Shanghai Stock Exchange (China), ranking first in Asia for the first time after June 2020. The capitalization of the Tokyo Stock Exchange is the fourth in the world, after those of New York (New York Stock Exchange), Nasdaq and the pan-European market Euronext. At the end of January, the total market capitalization of stocks listed on the Tokyo Stock Exchange was $6.34 trillion, $296.7 billion higher than the $6.04 trillion capitalization of the Tokyo Stock Exchange in Shanghai, according to WFE figures.

Analysts estimate that, for now, the Tokyo Stock Exchange is not threatened by a new speculative bubble like the one in the late 1980s, when the Japanese real estate market reached incredible highs while prices per square meter in certain Tokyo neighborhoods were 350 times higher than in Manhattan, the center of New York, according to AFP. However, the bursting of the bubble triggered a hard landing in the early 1990s, and for the next three decades, Japan's economy and society were severely affected.