According to Swhy's research report, after the bursting of the stock market bubble and real estate bubble in Japan in the 1990s, the "Lost 20 Years", with the Nikkei 225 index as the representative, there were a total of 4 significant rebounds in the Japanese stock market. Overall, the rebound in the 1990s was around 50%, but the adjustment depth deepened each time; the rise in the 2000s lasted the longest, with relatively large gains. Classifying the industries into four categories, at least 3 out of 4 rebounds outperformed the index, defined as an attack; the major industries include technology, consumer, and industry. During the corresponding adjustment phase of the rebound, all 4 rebounds outperformed the index, defined as resilient; the major industries include utilities and pharmaceuticals.

Shenwan Hongyuan's main points are as follows:

Rebound 1.0: Oversold rebound → Core assets.

After the bursting of the Japanese stock market and real estate bubble, the first round of rebounds was tumultuous, experiencing sharp rises, falls, rebounds, fluctuations, falls, and rises in sequence, totaling 668 natural days with an accumulated amplitude of 50.3%. The first sharp rise occurred on August 19, 1992, defined as an oversold rebound. Prior to this, the Japanese stock market had been adjusting for over two years, with the Nikkei 225 index falling from over 38,000 points in early 1990 to around 14,000 points, a 63% decline. On August 20, the Miyazawa Cabinet announced a 10.7 trillion yen comprehensive economic package, leading to a 32.1% rebound in the Nikkei 225 from August 19, 1992, to September 10, 1992, with all industries rising; notably, energy, finance, and real estate had higher gains. This was followed by a period of about half a year of consolidation (adjustment range about 11.4%). In February 1993, after 7 months, the Bank of Japan once again lowered interest rates, and in March, the Nikkei 225 index began to rebound, taking about a month with a 23% increase, with technology leading the way. This was followed by a period of oscillation and decline (the Nikkei 225's gain was 2.3% during the oscillation phase, followed by a -24.0% decline). By November, the rise resumed, and Japan completed another round of fiscal and monetary easing in 1993. This round of rise continued until June 1994, with a 33.7% increase; technology and manufacturing led the gains, becoming core assets at that time. The subsequent adjustment range after this rebound was 32.6%, lasting for 381 natural days.

Rebound 2.0: Expectation of a macroeconomic stabilization in consumption + manufacturing.

On January 17, 1995, a 7.3-magnitude earthquake struck the Hanshin area of Japan, causing significant damage to the country's economy and society. At the same time, the yen continued to appreciate against the US dollar. In April, the Murata Cabinet introduced the "Emergency Economic Measures for Yen Appreciation", followed by a 14.2 trillion yen fiscal expansion policy in September. During the same period, the Bank of Japan lowered interest rates twice, bringing the discount rate down to 0.5%. In June 1995, the Japanese government established the "Stock Market Stabilization Fund", with banks contributing around 2 trillion yen. In July, the US Federal Reserve preemptively lowered interest rates, and following negotiations, the yen's appreciation against the dollar ended. From July 1995 to June 1996, the Nikkei 225 index embarked on a year-long rebound with a 56.5% increase. Under the expectation of macroeconomic stability, consumption and manufacturing led the gains; notably, there was a significant increase in optional consumption, particularly in the auto industry, which coincided with the end of the US-Japan automobile trade war in 1996. The subsequent adjustment range after this rebound was 41.6%, lasting for 923 natural days.

Rebound 3.0: Sharing the global technology network bubble.

In 1999, the global economy gradually recovered from the 1997 Asia financial crisis, overlaid with the peak trend of the internet industry, leading to significant increases in global stock markets (A-shares experienced the "519" market in 1999). In the rebound from 1999 to April 2000, the Nikkei 225 index rose by 57.4%. The rebound structure in 1999 was relatively simple: technology saw gains far exceeding the index and other industries, which was inevitable under the industry trend. Additionally, there were two industries that declined in this rebound, namely energy and utilities. The subsequent adjustment amplitude for this rebound was 63.5%, lasting 1111 natural days.

Rebound 4.0: A bull market driven by the cyclical and manufacturing global economic recovery.

This round of Nikkei 225 index rebound from 2003 to 2007 may be more appropriately described as a "bull market". During this upward trend, the Nikkei 225 index rose by 139%, lasting over 4 years. Despite the generally conservative fiscal policies chosen by the Japanese Koizumi Cabinet from 2003 to 2007, benefiting from the strong growth of the Chinese economy driving global economic growth, the resolution of Japan's domestic debt issues, stable housing prices in the Tokyo metropolitan area, and multiple bullish factors, Japan's cyclical, manufacturing, and technology sectors all experienced excess returns. The subsequent adjustment amplitude for this rebound was 61.1%, lasting 599 natural days.

Japan's fiscal and monetary policies in the 1990s:

Fiscal policy: Starting from 1992, the Japanese government's fiscal deficit continued to increase, exceeding 100% by the 21st century (this set the stage for future fiscal austerity). During the period of significant economic pressure from 1992 to 1994, the Japanese government continuously increased fiscal spending. Public investment contributed more to the real GDP growth rate than corporate equipment investment for three consecutive years, until the Hashimoto Cabinet took office in 1996. After that, fiscal policy no longer exerted force, but subsequent issues with Japan's non-performing debt gradually surfaced. Economic pressure increased, leading Japan to reintroduce fiscal easing in 1998.

Monetary policy: The Bank of Japan started lowering the discount rate in July 1991, reaching 0.5% by 1995. However, the credit transmission in Japan remained sluggish, with the money multiplier continuously decreasing. In 1998, Japanese banks began lowering the overnight call rate, which dropped to 0.03% by March 1999, entering the so-called "zero interest rate" period. Additionally, starting in 1997, the Bank of Japan began purchasing government bonds, buying 400 billion yen worth of government bonds twice a month on the secondary market, increasing to 600 billion yen in 1998.

Risk warning:

In addition to macro policies and industry trends, geopolitical factors also have a significant impact on the direction of Japan's economy and stock market.