According to the Financial Association on December 30th (Editor: Lu Xing), 2024 is a year for Japanese investors to rejoice. As the last trading day of the year, on Monday afternoon, the Nikkei 225 Index closed at 39,894.54 points, marking the highest annual closing level in the history of Japanese stocks.

Previously, the highest annual closing point for this index was 38,915.87 points in 1989.

From the beginning of this year to date, the Nikkei 225 Index has risen by 6,430.37 points, nearly 20% year-on-year. In 2023, this index increased by 28%.

Nikkei 225 Index trends over the past 40 years (1984-2024)

Has Japan's stock market emerged from the 'lost thirty years'?

After experiencing the so-called 'lost thirty years', in the past two years, supported by the depreciation of the yen and the Bank of Japan's low interest rate policy, the Japanese stock market has gained upward momentum.

This year, as Japanese companies frequently conducted share buybacks, along with vigorous promotion from rights protection funds and retail investors, the Japanese stock market continued to rise, eventually surpassing the levels seen during the bubble era.

In July of this year, the Nikkei 225 Index soared to an all-time high of over 0.042 million points, and the Topix index, which has a large number of medium-sized enterprises, also surpassed the peak levels of the bubble era in the same month.

The performance of the Nikkei 225 Index for this year.

Analysts say that the rise of Japan's stocks this year is particularly surprising, as this round of increase has not been significantly driven by foreign investors—who have historically been the major factor determining the movements of the Japanese stock market.

The operator of the Tokyo Stock Exchange stated that foreign investors net sold approximately 32 billion dollars in cash stocks and futures in 2024, with most of it being sold in the second half of the year.

Specifically, among the constituent stocks of the Nikkei 225 Index, the best performer is Fujikura, a Japanese company that specializes in Datacenter cable production, whose stock price has increased sixfold this year, making it the stock with the highest percentage increase in the Nikkei/Yen.

The worst performing stock among the constituents of the Nikkei 225 Index is Raytheon Technologies, which specializes in chip testing equipment, with its stock price falling 59% this year.

Will Japanese stocks perform better next year?

Takeo Kamai, the Executive Service Director of Credit Lyonnais in Tokyo, stated that by the end of this year, driven by the "Christmas Rally", the Japanese stock market has received further boosts. Additionally, the more favorable outlook for Japanese corporate giants aligning with investor interests also helps to strengthen investor confidence.

"With the recent news about Honda and Nissan merging, as well as the news of increased returns for shareholders at Toyota Motor, the market's largest company by Market Cap in Japan, it may lead some cautious opportunistic investors to look forward to reigniting the ‘buy Japan’ story in the coming year," Kamai said.

However, on Monday, the Nikkei 225 Index dropped 0.96% in a single day. Last week, the index had increased for three consecutive trading days, closing at 40281.16 points, marking a five-month closing high.

Fumio Matsumoto, Chief Analyst at Okayama Securities, stated:

"Investors selling Stocks today may be because they cannot find a clear reason for the Nikkei Index to break through the 0.04 million point level."

However, this does not mean that investors have a pessimistic attitude towards the market for the coming year. They might just want to avoid risks during Japan's New Year holiday, as this year the holiday period is longer than usual.

Due to the New Year holiday, the Japanese stock market will be closed from this Tuesday (December 31) until it reopens on January 6 next year.