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Japan's Stock Market Revives Catchy Phrase while Edging Toward New Record

Japan's stock market is approaching all-time highs, bringing some professionals to reminisce with cute bubble-era slogans. What's driving the market this time? 



A board shows the closing price of the Nikkei Stock Average. recovering to the highest level in about 34 years. On February 16 in Tokyo. (©Kyodo)

On February 16, the Nikkei Stock Average continued its upward climb on the Tokyo Stock Exchange. At one point, the stock market surge exceeded ¥700 JPY ($4.67 USD. That edged within ¥50 of the all-time high of ¥38,915.87 ($259.49), set on December 29, 1989. That milestone was reached during Japan's bubble economy era.  

Within Japan's stock market, professionals recall this historic peak with a wordplay. Translated, the catchy phrase goes, "Let's head to the desert." That might not make sense in English, but in Japanese, the phonetics correspond to the number 38,915 (sa-ba-ku-i-ko). 

With the resurgence of this slogan, anticipation is building for surpassing the all-time high.

Tokyo Reflects US Stock Market Surge

The closing price on February 16 settled at ¥38,487.24 ($256.63). That marked a rise of ¥ 329.30 ($2.20) from the previous day.

On February 15, the United States markets experienced a surge in the Dow Jones Industrial Average. Its rise was fueled by growing expectations of imminent rate cuts by the Federal Reserve Board (FRB). 

This momentum spilled over into the Tokyo market on February 16. There, a wide array of stocks witnessed significant buying activity. Stocks related to semiconductors, which have been driving the recent uptrend, stood out among them.

New Taiwan Semiconductor Manufacturing plant is under construction in November, 2023, in Kikuyo, Kumamoto Prefecture, Kyushu. (©Kyodo)

Hot Semiconductor Stocks

The Nikkei Stock Average witnessed a notable surge at the opening of trading on the morning of February 16. Briefly, it reached as high as ¥38,865.06 ($259.15). However, as the weekend approached, profit-taking orders emerged, leading to a stalemate between buying and selling orders. That led to a slight reduction in the upward momentum by the close of trading.

There are voices from major securities professionals saying, "There is some overheating in certain stocks." That could be considered the case regarding semiconductor-related stocks. However, many market participants still perceive the potential for further upward movement in stock prices.

A monitor shows the Nikkei average stock price in the 38,800 yen range in Shinbashi, Tokyo on February 16 (© Sankei by Takumi Kamoshida)

'Reaching ¥40,000 by Year-End'

In light of the rapid four-day surge exceeding ¥1,500 in the Nikkei average, and with its all-time high looming, Nomura Securities strategist Maki Sawada anticipates a change in the short term. "The upward pace is expected to slightly adjust in the coming week, becoming somewhat moderate," the strategist said. 

However, the overall upward trend of the Nikkei average remains intact. Sawada forecasts that "by year-end, the Nikkei average will reach ¥40,000." 


(Read the report in Japanese.)

Author: Takehiko Nagata 

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