Congratulations Nikkei, Now Don’t Screw It Up
BloombergMar 01
Japan: Nikkei Index Surges Past 1989's Record High
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The Facts
Japan's Nikkei 225 stock average hit a record closing high on Thursday after the blue-chip index increased 2.2% to 39,098.68, surpassing the previous highest closing level of 38,915.87 recorded in 1989.
The Nikkei 225, a benchmark stock index in Japan, rose as high as 39,156.97 points, also beating the previous intraday all-time peak of 38,957.44 points achieved on Dec. 29, 1989.
The Spin
Narrative A
Record gains in Japan's benchmark stock index are driven by improved corporate governance and investment flows diverted from a battered Chinese stock market. The blue-chip index has successfully defied a recession in Japan alongside wars in Europe and the Middle East. While it may be volatile in the short term, the Nikkei could once again become Asia's most valuable stock market as Tokyo shows signs of change.
Narrative B
The current boom in the Nikkei could be a fleeting affair, and it's too early to suggest that Japan is on course for global dominance. The long-term outlook for Japanese equities remains one fueled by skepticism. No matter how bullish foreign investors are today, until the Bank of Japan learns from its past mistakes and the country fixes its political trajectory, economic challenges — including inflation and slow wage growth — will not go away.