Japan’s Nikkei 225 Stock Average yesterday climbed to its highest since the nation’s bubble economy era more than three decades ago, reflecting investor optimism that growth is returning after the country’s long battle with deflation.
The blue-chip gauge rose 1.2 percent to close at 33,763.18 in Tokyo, a level unseen since March 1990, lifted by a rebound in technology shares and a drop in Treasury yields. The benchmark TOPIX, which some funds prefer to follow because it is more comprehensive, gained 0.8 percent.
Both the Nikkei 225 and TOPIX completed an annual advance of more than 25 percent last year, their best performance in a decade. The measures were among the world’s biggest gainers last year as authorities pushed companies to improve shareholder value, while decades-long deflation faded and was replaced by mild price gains.
Photo: AP
A yen rate that remains weak historically despite a recent rebound has supported exporters, and optimism after Warren Buffett parked more of his cash in Japan’s biggest trading companies has also boosted equities in the world’s third-largest economy.
“Japanese stocks have been cheap for a long time,” and signs of corporate governance reforms and Buffett’s investments mean the Nikkei’s return to a three-decade high was not that surprising, Sumitomo Mitsui Trust Bank Ltd strategist Ayako Sera said.
“It’s important to watch if the Nikkei can reach a record high now,” she said. “The 40,000 yen level still seems quite far away.
Elsewhere in Asia, there were also gains in Bangkok, Manila, Mumbai, Shanghai, Singapore, Sydney and Wellington.
The advances came as traders try to ascertain the US Federal Reserve’s plans for interest rates this year, with focus firmly on the release this week of key inflation data.
The outlook was given a boost by a plunge in oil prices — a key driver of inflation — on Monday after Saudi Arabian Oil Co announced a cut of US$2 a barrel as it looks to regain lost market share, a move that fanned concerns that supply was far outstripping demand, particularly with China’s economy still struggling.
Equities in Hong Kong ended 0.21 percent down as traders failed to maintain early strong momentum, while Seoul shed 0.3 percent.
In Taipei, the TAIEX dipped 0.21 percent to close at 17,535.49 points, failing to sustain its earlier gains and falling below the 20-day moving average of 17,646 points, as it did on Monday.
“Before the presidential vote, which remains tense, many investors preferred to take advantage of the initial gains and pocketed their money,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said. “They simply wanted to hold on to as much money as possible for the moment before reinvesting their funds after the election.”
Additional reporting by AFP and CNA
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