Tokyo Stock Exchange's main index at all-time high after 34 years

The stock market in Tokyo set a historic high yesterday, for the first time since 1989, when the speculative bubble appeared. Yesterday's advance was due to the financial results announced on Wednesday evening by the American technology giant Nvidia.

The Nikkei 225 index ended yesterday's session up 2.2%, reaching 39,098.68 points. The previous high closing record was recorded on December 29, 1989: 38,915.87 points. Also yesterday, the Nikkei 225 set a historic "intraday" maximum (during a trading session) of 39,156.97 points, breaking the peak also reached on December 29, 1989: 38,957.44 points.

"This is a moment that reflects investors' recognition that a true, sustained bull market has been underway in Japan for some time and is likely to provide additional future gains," Morgan Stanley strategists said, according to CNN. noting that a specific reason for the optimism in the market is the solid earnings of the companies.

Over the course of 2023, the Nikkei 225 has registered an increase of 28%, which is the best annual performance in the last ten years, according to CNN. Since the beginning of this year, the index has risen by 17.5%, and in the last year it has gained 42.4%.

It should be noted that the Tokyo Stock Exchange (TSE) 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 Exchanges (WFE). They show that at the end of last month, 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 last month, 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 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.