Stock markets are doing well worldwide, including Japan. The leading Nikkei 225, which, as the name suggests, consists of 225 major Japanese listed companies, won almost 2 percent this morning and finished on 27,568 points.
It was the first time since April 1991 that the Nikkei 225 closed above 27,000 points.
US incentive plan
The Japanese stock market is benefiting from record levels on Wall Street. US investors responded enthusiastically yesterday after President Donald Trump signed the $ 900 billion stimulus plan for the US economy.
This plan is expected to boost the economy and thus corporate profits.
Maybe even more stimulation
There may be more in the pipeline, as the majority of the House of Representatives voted in favor of Trump’s plan to increase the American support check from $ 600 to $ 2000.
The plan also has to be approved by the Senate and the Republicans are in the majority and it remains to be seen whether they will also vote for it.
Investors worldwide often look at Wall Street with an oblique eye, because it is the stock exchange of the largest economy in the world. Furthermore, many companies from outside the US are often also active in the US. This certainly also applies to Japanese companies.
The Nikkei has roughly paralleled the broad US S&P 500 index this year. Both are now more than 15 percent higher than at the beginning of this year, but the Japanese index did on balance worse than Wall Street in recent years.
In any case, the American exchanges did well compared to other exchanges, because ‘big tech’, such as Amazon and Alphabet, have done so well.
Such companies are much more strongly represented in the US than in Japan, among others, explains RTL Z stock market commentator Hans de Geus.
Despite the fact that the Nikkei is doing so well now, the Japanese stock market is still significantly lower than at the end of 1989 (!), When the Nikkei closed at almost 39,000 points on exactly the same date as today.
The fact that the Nikkei fell sharply in subsequent years is due to causes specific to Japan. For example, because there was a lot of money available, there was a big increase in prices of real estate and shares. After 1989 that bubble burst.
Shares don’t always get better
Nevertheless, this indicates that equities do not necessarily outperform other investments over the longer term. For example, the American Dow Jones only returned to the level of just before the 1929 stock market crash in 1952.
Our own AEX index is also still not at the highest level ever of just above 700 points, which was achieved in April 2000.