Japan’s
Nikkei
stock index finished at a record high on Thursday. The last time that happened, the Cold War was just ending and Band Aid was topping the charts with “Do They Know It’s Christmas?”
With a 2.2% gain for the day, the Nikkei closed higher than the last record set on Dec. 29, 1989. Given the optimism about Japan’s economy, its emergence from decades of deflation, the signs that the central bank will provide plenty of stimulus, stocks are poised to keep going higher.
In the early 1990s, Japan suffered a nasty real estate crash that tanked the wider economy and sent it into an extended period of falling consumer prices. An aging population made matters worse. Things finally turned around as the Covid-19 pandemic ended, injecting inflation into the system and forcing companies to become more productive and profitable.
Billionaire investor Warren Buffett noticed the growing strength of Japanese companies and bought up big stakes in the country’s trading houses, which are conglomerates that play an influential role.
“The Nikkei has refound its mojo but it’s been a long time coming,” said Susannah Streeter, head of money and markets at
Hargreaves Lansdown.
The next question for Japan is how quickly it can pull out of the recession it fell into in the second half of last year.
The Bank of Japan
has kept monetary policy ultra loose even as inflation has picked up, and this month signaled it plans to continue doing so. That has kept the yen weak, helping bolster exports.
Write to Brian Swint at [email protected]
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