Caixin Media, July 4th news (editor Xiaoxiang), although compared with ..$Nikkei 225 (.N225.JP)$The index was about 4 and a half months late, but the TOPIX index ..

Market data shows that ..$TOPIX (.TOPIX.JP)$After opening today, the TOPIX index rose all the way, reaching a high of 2890.52 points at the time of publication, breaking the historical high point of the intraday period set in December 1989. Almost all of the 33 industry classification indexes rose after the opening of the market, with auto stocks leading the gains.

Compared with the Nikkei 225 index, which only covers 225 component stocks, the TOPIX index obviously has a broader coverage range - it contains more than 2,000 component stocks, which is relatively more able to reflect the overall situation of the Japanese market.

"Unlike the Nikkei 225 index's emphasis on certain types of stocks, the trend of the TOPIX index can more reflect that the market has ended the callback bottom at the beginning of the second quarter and the entire market has further touched historical highs," said Hideyuki Ishiguro, chief strategist of Nomura Asset Management Co. He added that Japan is moving away from years of deflation and is still undervalued compared to the United States.

Previously, the Nikkei 225 index of blue chips has set several historical highs as early as February this year, boosted by the rise of global technology stocks and the weakening of the yen, which boosted export-oriented stocks. Today, the Nikkei 225 index has approached the high point of March again and returned to above 40,000 points earlier this week as the TOPIX index reached a new high. Last year, both indexes rose by more than 25% due to the influence of ultra-low borrowing costs, high corporate profits, and the improvement of corporate governance promoted by the Tokyo Stock Exchange. Global funds are accelerating their entry into the Japanese stock market.

"Is there still gasoline in the gas tank" in Japanese stocks? There are almost no signs currently showing that the Bank of Japan's shift to a tight monetary policy has suppressed the risk appetite of Japanese stock investors. Instead, many Japanese investors believe that with the return of inflation, Japan's economy has turned to the good side.

Looking at the specific leading sectors, insurance and bank stocks are one of the best performing sectors since the mid-April when TOPIX hit a bottom. Japanese banks have continued to rise because market speculation that higher interest rates will help increase loan profitability, and insurance companies have been boosted by expectations that they will improve profitability through bond investments.

Institutional investors have recently shown a trend of "mechanically buying" Japanese stocks. Yoshitaka Suda, a cross-asset strategist at Nomura Securities, said: "The rebalancing trades of global investors are one of the driving factors for the recent rise in the Japanese stock market."

During the second quarter of this year, the Nikkei 225 index fell by about 2%, lagging behind the global major stock indexes such as the S&P 500 index, which rose by 4%. During this period, the depreciation of the yen is also intensifying, so the valuation of Japanese stocks is actually cheaper in US dollars. Many institutional views believe that the recent surge in Japanese stocks can be regarded as a "revenge rebound" after the weak performance in the quarter ending in June.

Bank of America's fund manager survey in June also showed that the Japanese stock market is still the most popular market in Asia. One-third of respondents believe that the most important market theme is the improvement of Japanese corporate governance.

Many analysts expect that the Tokyo Stock Exchange's latest TOPIX index reform plan will further increase the pressure on corporate governance improvements. Goldman Sachs strategists Bruce Kirk and others wrote in a report: "Japanese companies still hope to show a posture externally, and they are responding to the pressure of corporate governance reforms imposed on the Tokyo Stock Exchange."

There are almost no signs showing that the Bank of Japan's shift to a tight monetary policy has suppressed the risk appetite of Japanese stock investors. Instead, many Japanese investors believe that Japan's economic fate has turned to the good side with inflation expected to return.

Editor/Somer