At the beginning of this year, the Nikkei 225 index led the global market and broke the 34-year-old historical high. However, the rise of the Nikkei has met with obstacles recently as the yen continues to depreciate.

It is easy to see that unlike the soaring trend from last year to the beginning of this year, there are uncertain factors accumulating in the current Nikkei. After reaching a historic high, the Nikkei 225 index has been in a sideways trend for a long time and has been hovering between 37,000 and 40,000 points for the past two months.

Overall, the Japanese stock market has had a lot of profitable effects this year as well. The Japanese sports giant, Asics (7936.JP), which has a history of 75 years, has seen its stock price double this year, with its business booming in recent years.$ASICS (7936.JP)$Semiconductor stocks have also been a major investment theme in the Japanese stock market this year, and the global semiconductor polishing equipment leader Disco (6146.JP) and Japanese semiconductor equipment manufacturer, Kokusai Semiconductor (6525.JP), have risen by more than 77%, 55% and 38% respectively. Since last year, the cumulative increase of these two companies is as high as 400%, 124% and 170%.

Semiconductor stocks are also an investment theme in the Japanese market this year, with global semiconductor polishing equipment leader$Disco (6146.JP)$and Japanese semiconductor equipment manufacturers$Kokusai Electric (6525.JP)$and Japanese semiconductor equipment manufacturers$Tokyo Electron (8035.JP)$These three companies have seen increases of over 77%, 55%, and 38% respectively, with cumulative increases of up to 400%, 124%, and 170% since last year.

Industrial machinery stocks are also performing well this year, as Japanese industrial giants$Mitsubishi Heavy Industries (7011.JP)$, $Hitachi (6501.JP)$have both risen over 99% and 67%, respectively.

The main reason for the rise is twofold. First, the recovery of manufacturing demand in China, the United States, and Japan has increased, and the depreciation of the yen has boosted companies exporting these devices. Many of these customers are from China and the United States, especially Mitsubishi Heavy Industries, which is engaged in military industry. The second point is from the perspective of valuation. The profit margins of these industrial machinery companies have increased compared to the past few years. In the past, these industrial machinery companies did not distribute dividends or expand investment even if they made money. They retained a lot of cash on their books, were financially healthy, and could be used for share buybacks and dividends in the future when demand grows. However, the dividend payout ratio of such companies is not high, and the dividend yield is generally only around 1.5-2%.

The main reason for the rise is twofold. First, the recovery of manufacturing demand in China, the United States, and Japan has increased, and the depreciation of the yen has boosted companies exporting these devices. Many of these customers are from China and the United States, especially Mitsubishi Heavy Industries, which is engaged in military industry. The second point is from the perspective of valuation. The profit margins of these industrial machinery companies have increased compared to the past few years. In the past, these industrial machinery companies did not distribute dividends or expand investment even if they made money. They retained a lot of cash on their books, were financially healthy, and could be used for share buybacks and dividends in the future when demand grows. However, the dividend payout ratio of such companies is not high, and the dividend yield is generally only around 1.5-2%.

In addition, the impact of the depreciation of the yen, the Japanese tourism industry has gradually recovered to the level of 2019 since the beginning of this year, which has also driven a surge in sales at Japanese department stores.$Isetan Mitsukoshi Holdings (3099.JP)$The stock price of Mitsukoshi Isetan (3099.JP) has also risen sharply by more than 86% this year.

As Japan approaches the interest rate hike cycle, many financial stocks have performed strongly and dominated the top gainers list. Among them, Mitsubishi UFJ Financial (8306.JP) has risen by 62%, 57%, 47%, and 27% respectively this year. In addition, MS&AD Insurance (8725.JP) has also risen by more than 68% this year. Japanese trading companies Mitsui & Co. (8031.JP) and Mitsubishi Corp. (8058.JP) have also performed well this year, reaching historic highs at one point. Despite the current small pullback in stock price, they still recorded gains of 40% and 35% respectively this year, outperforming the Nikkei/Yen index significantly.$Tokio Marine Holdings (8766.JP)$, $Sumitomo Mitsui Financial Group (8316.JP)$, $Mitsubishi UFJ Financial Group (8306.JP)$The increase during the year was 57%, 47%, and 27%, respectively. In addition,$MS&AD Insurance Group Holdings (8725.JP)$Also up over 68% year-to-date.

Japanese trading companies$Mitsui (8031.JP)$, $Mitsubishi (8058.JP)$Despite the current small pullback in stock price, they still recorded gains of 40% and 35% respectively this year, outperforming the Nikkei/Yen index significantly.

The mid-year inventory and sharing activity is coming in full force. In the first half of 2024, the stock market is booming. What stock market opportunities have you taken advantage of?

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Editor/Somer