On Friday morning, Japan's stock market continued to rise in early trading, and the Nikkei 225 index broke through its high in March, reaching a historical high; the TOPIX index opened up 0.1%, also reaching a historical high.

As Donald Trump's lead in the U.S. presidential race continues to widen, people are eager to find the key winning trades in the global market. History has shown that the Japanese stock market is a good bet.

In the year after Donald Trump won the 2016 U.S. presidential election, the TOPIX index rose nearly 30% in U.S. dollar terms, outpacing the S&P 500 and MSCI World indices by about 20% each. Strategists say the boost from a weaker yen will give Japanese stocks more room to rise.

Tomo Kinoshita, a global market strategist at Invesco Asset Management Japan, said: 'The rise in U.S. bond yields led to a depreciation of the yen against the dollar, which should also support the Japanese stock market. Although most Asian stock markets should benefit from Trump's victory, given that manufacturing companies dominate the Japanese stock market, the Japanese market should benefit more.'

For years, the Japanese stock market has been overlooked by faster-growing markets, but recent signs suggest that the Asian economy has escaped deflation and is on a sustainable growth path, giving the Japanese stock market new vitality. On Thursday, the TOPIX index broke through its peak in the bubble era to touch a historic high, and a new round of buying could further stimulate it.

Due to the large gap between Japanese and U.S. yields, the yen has fallen nearly 13% against the dollar this year, the worst performance among major currencies. A weaker yen would largely boost the Japanese economy, which is good news for manufacturers such as Toyota and Nissan as they can increase their exports. According to data compiled by Bloomberg and the Tokyo Stock Exchange, manufacturing accounts for more than half of Japan's total market capitalization.

Valuation is another factor. In major markets (except China), Japan has the cheapest growth stocks, with MSCI's Japanese growth stock index trading at 22 times the one-year forward blended earnings expectations.

It needs to be clear that Trump's victory may not necessarily boost the Japanese stock market across the board. Jasmine Duan, senior investment strategist for RBC Wealth Management in Asia, said: 'We believe that Japan will not be the safest market in Asia if Trump is re-elected. If the yen continues to weaken, the Trump administration may take action to force the yen to appreciate, which would in turn benefit the Chinese stock market.'

However, some believe that as global funds move money out of other Asian markets in anticipation of Trump taking a tougher stance, Japan's stock market is likely to be a potential beneficiary. Analysts predict that some of the money will eventually flow into Japan. This is because Japanese companies are placing greater emphasis on corporate governance, and the Bank of Japan is no longer adopting an ultra-loose stance, indicating that the Japanese economy is strengthening its recovery.

Naka Matsuzawa, chief strategist at Nomura Securities, said: 'For global investors, the Japanese stock market will be one of the better choices, and as the market focuses on the neutralization of Bank of Japan policies, bank shares should perform better.'

There is little evidence that the Bank of Japan's shift to a tightening monetary policy will dampen investor sentiment, as they believe that the country's fate has turned in a positive direction with the recovery of inflation. Banking stocks are rising due to speculation that higher yields will help boost loan profit margins, while insurance companies are rising in anticipation of higher profits from bond investments. In a June survey of fund managers by Bank of America, the Japanese stock market remained the most popular market in Asia, with a third of respondents citing improved corporate governance as the most important theme.