Japan stocks rocket to highest level since 1990

Strategists say “foreign investors are back” as  Japan’s Tokyo Price Index hit its highest point since August, 1990.

It could be good news for Japanese whisky and sake makers as the Tokyo Price Index (Topix) rose by more than 6% this week (year-to-date), and continues to trade higher, reflecting an investment market in line with its 1990 heyday.

The broad-based index, made up of about 2,000 constituents, has outperformed its regional peers in Asia Pacific.

“Foreign investors are back – which says something about the nature of the equity market recovery in Japan,” Societe Generale’s Asia equity strategists Frank Benzimra and Tsutomu Saito said in a statement on Tuesday 16 May.

Foreign investors bought a net JP¥2.1 trillion (US$15.4 billion) worth of Japanese stocks in April 2023, though Japan’s corporate sector remains the largest net buyer of Japanese stocks, with a volume of JP¥1.1 trillion yen year-to-date.

The Nikkei 225 also rose to the highest since November 2021 as investors look for an alternative to China.

Warren Buffet’s recent trips to Japan have widely been interpreted as his endorsement of the Japanese market, while the Financial Times reported that Japan has exited its recession this month.

In March, the drinks business revealed that Tokyo had become the sixth most important global financial market, according to The City of London Corporation’s annual survey, which looks at more than 95 different metrics, including green finance activity across all asset classes.

It appears as though the country’s fortunes are turning around after the Bank of Japan’s governor Haruhiko Kuroda changed the course of global markets when he unleashed US$3.4 trillion of Japanese cash on the investment world in 2016.

Kuroda moved to suppress bond yields seven years ago resulted in a mountain of offshore investments worth more than two-thirds of Japan’s economy.