Japan’s Nikkei index could climb to new highs in 2021

Tokyo

The Nikkei kept making new highs.

(Photo: AP)

Yokohama The Japanese stock market continued to gain momentum towards the end of the year. The Nikkei 225 climbed to the heights it had last moved in the mid-1990s, and constantly reached new highs, most recently on December 21, when it temporarily stood at 26,906 points.

The index has risen by a good twelve percent since the beginning of the year. The broader Topix Index, which consists of over 2,000 Japanese companies, is also on the upswing and has risen by around nine percent since the end of October.

Behind the rally in Japan’s markets are foreign bargain hunters who are betting on a recovery in the global economy after the breakthroughs in vaccine research. They expect a global comeback to benefit the export-oriented Japanese economy.

The fact that investor legend Warren Buffett invested a whopping six billion dollars in the Japanese market in August seems to have convinced even Japan skeptics. According to the Tokyo Stock Exchange, foreign investors bought Japanese stocks worth 384 billion yen ($ 3.7 billion) in the second week of November, up from 357 billion yen the previous week.

Given these developments, analysts see signs that the Japanese indices could rise even further in 2021. Goldman Sachs raised its outlook on the Nikkei index and now estimates that the benchmark will climb to 27,200 over the next twelve months. Ryota Sakagami, chief equity strategist at JP Morgan Securities Japan, went even further, predicting the Nikkei 225 could hit the 30,000 mark.

Everyone agrees that things should continue to improve: “Japan’s old economy should benefit from the global recovery,” said Masafumi Oshiden, who is responsible for the Japanese stock market at the Tokyo branch of BNY Mellon Asset Management, told the business newspaper “Nikkei”.

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