Economy & Tech

As Stocks Continue to Soar, Japan Must Seize the Moment

With Japanese stocks reaching all-time highs, Japan should use this opportunity to revitalize industries, implement reforms, and invest in digital technology.

Published

8 months ago

March 11, 2024

Yasuo Naito, Editor in Chief

A monitor shows the Nikkei index surpass 40,400. Tokyo, Minato Ward, on the morning of March 7. (Inside image by ©Kyodo)

The most attention-grabbing Japanese news, echoing across global headlines, has been the remarkable surge in Japanese stocks and the market's future trajectory.

Indeed, as soon as we stepped into March, the Nikkei Stock Average reached the historic milestone of 40,000 for the first time ever.

Nikkei Stock Index Surpasses 40,000 for the First Time

The above article, translated from a report by The Sankei Shimbun, sheds light on how tech stocks, particularly in semiconductors and information technology, are spearheading the market's momentum. This surge has sparked bullish projections for the Nikkei within the securities industry, with some estimates reaching as high as 45,000.

*The afternoon closing price of the Nikkei Stock Average reached an all-time high in the 40,000 range on March 4. Chuo Ward, Tokyo. (©Sankei by Yoshinori Saito)*

Seize the Opportunity

Recent discussions with government officials have also revolved around the escalating Japanese stock prices. During the week starting March 4, I met with an official to discuss various topics, including the Russia-Ukraine War and the upcoming United States presidential elections in November. Our discourse also touched upon developments in China, including the risk of a potential Taiwan crisis, and the Fumio Kishida administration's response to the political funds scandal amidst dwindling approval ratings.

Notably, the official also revealed that there had been a surge in interview requests from prominent Western figures within the security realm.

"The government refrains from commenting directly on Japan's stock price surge. However, it acknowledges the increasing opportunities to elucidate the Kishida administration's 'new form of capitalism' policies to foreign audiences. These policies aim to promote stock investment among the general populace, fostering the expansion of financial assets," the official explained.

Global interest in this phenomenon reverberated through the most-read article rankings of JAPAN Forward as well. Remarkably, three of the top ten articles over the past fortnight focused on rising Japanese stock prices.

For example, one of the most-read articles was penned by British analyst Peter Tasker titled "Can the Bank of Japan Turn a Problem Into a Triumph?"

In it, Tasker opined, "The much-discussed move from bank deposits to stock market investment would become a reality. And all the action would be centered not on US or Indian equities, but exclusively on Japanese names."

Semiconductors

Another popular article was "Semiconductors: New TSMC Plant in Kumamoto Spotlights Taiwan University's Training of Students in the Field." It was written by Akio Yaita, the Taipei Bureau chief of The Sankei Shimbun. Semiconductors are often hailed as "the staple of industry" in Japan.

In the article, Yaita quoted a director of a Taiwanese university research center who emphasized, "Although the semiconductor industry will grow tremendously in the days to come, it has not kept up in terms of preparing human resources."

This observation suggests a potential acceleration in future exchanges of human resources within the semiconductor industry.

The rapid ascent of Japanese stock prices is also boosted by the surge in US stock prices and foreign investors drawn to a weak yen. Some Chinese investors are now selling Chinese stocks and buying Japanese ones.

Emerging markets like China and Russia were once perceived as attractive investment destinations. However, they are currently not considered good investment options due to increasing militarization and geopolitical risks.

A semiconductor plant by Japan Advanced Semiconductor Manufacturing Company (JASM), a subsidiary of Taiwan Semiconductor Manufacturing Company (TSMC), in Kikuyo, Kumamoto prefecture on February 24, 2024. (©Kyodo)

'Japan Is a Buy'

It appears inevitable that global investment capital, seeking stability, will gravitate towards Japan. Undoubtedly, after over three decades since the collapse of the bubble economy, Japan finds itself presented with a significant opportunity.

Japan must seize this moment to revitalize domestic industries, fortify governance, and drive structural reforms such as enhancing efficiency. It must also accelerate investments in burgeoning sectors like digital technology. This will not only enhance its value but also serve as a catalyst for shaping the future. As Kishida once said, "Japan is a buy."

Amidst the backdrop of increasing global uncertainty, JAPAN Forward aims to continue sharing new endeavors undertaken by Japan for its people and the world.

Watch for the next issue on April 22.

JAPAN Forward is now in its seventh year. Join us as we continue to share the true face of Japan with the world. For inquiries, please call 0570-033-433 (Sankei iD) or email us at info@japan-forward.com.

(Read the article in Japanese.)

Author: Yasuo Naito, Editor in Chief, JAPAN Forward