The Japanese Nikkei stock index briefly surpasses its all-time high

Japan’s benchmark index continues to reach new highs, briefly surpassing the record closing level reached at the height of Japan’s financial bubble in 1989.

The Nikkei Stock Average JP:NIK rose 1.7% to 38,924.88 briefly Thursday morning, surpassing its record closing high of 38,915.87 set on Dec. 29, 1989. The index recently rose 1.6% to 38,868.56, compared to the historical maximum intraday value of 38,957.44, also reached on the same day in 1989.

The benchmark index rose 14% year to date through Wednesday, after rising 28% in 2023, boosted by the return of modest inflation, improvements in corporate governance and a weaker yen, which raises the value of corporate profits made abroad in yen terms.

In March last year, the Tokyo Stock Exchange called on listed companies to improve equity returns and correct discounts reflected in their share prices, prompting several companies to increase dividends and buy back shares. The move added to the exchange’s efforts in recent years to introduce more independent directors to companies’ boards in a bid to improve their management oversight.

Marred by years of deflation and slow growth, the Japanese stock market has lagged behind others in recent decades. The Dow Jones Industrial Average has risen more than 14 times since the end of 1989.

However, the Japanese market, along with the Indian one, has recently attracted increasing amounts of global capital, offering an attractive alternative to a Chinese market mired in a crisis due to the country’s struggling real estate sector and a regulatory crackdown on technology sector.

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