Japan's stock market has performed well so far in 2024.

In February of this year, Japan's benchmark Nikkei 225 index hit its highest point since 1989, and last Thursday (July 4), both the Nikkei and TOPIX indexes broke previous records. The TOPIX index has already broken the high point of December 1989, setting a new 34-year high. Last Monday (July 8), the Nikkei 225 index hit a new high again, reaching a level of 41133 points. Jesper Koll, a senior executive at Tokyo-based financial services company Monex Group, said that the company's income is the driving force behind the current market rebound in Japan's stock hitting a new high this year, especially the Nikkei Index hitting two new highs this year in an interview.

On Monday (July 8th), it hit a new high, reaching a level of 41,133 points.$Nikkei 225 (.N225.JP)$日经225指数 should be translated as nikkei 225 index

Regarding this year's new high for Japanese stocks, especially the Nikkei Index hitting two new highs this year, Jesper Koll, a senior executive at Tokyo-based financial services company Monex Group, said in an interview that the company's income is the driving force behind the current market rebound.

Koll pointed out that "Japanese companies are currently benefiting from decades of business restructuring, and the break-even point is at a record low globally, so even if revenue growth is small, it can bring explosive profit growth."

He expects that the company's profits will grow by 35% during the next two fiscal years from April 2024 to March 2026, with an annual growth rate of 4%. He predicts that both domestic and global sales of Japanese companies will increase. One of the important bases of this prediction is that Rengo, Japan's largest labor union, announced an increase in wages, and the monthly wages of workers supported by the union will increase by an average of 5.1% by March 2025, the largest increase in 33 years.

In addition, Koll believes that Japan's monetary, financial, and regulatory policies are stable and conducive to growth, which is an important support for the financial market.

Another analyst pointed out that the recent rise in Japanese stocks is due to the joint effects of foreign capital inflows, high investor sentiment, and institutional investors' rebalancing of Japanese assets.

How long can Japanese stocks continue to rise?

Earlier this year, Koll predicted that it was "completely reasonable" for the Nikkei 225 index to exceed 55,000 by the end of 2025. In the latest interview, Koll again stated, "I insist on my prediction- the Nikkei 225 index is expected to climb to 55,000 by the end of next year." If his prediction comes true, there will be a 35% increase above the current level.

In a report last week, UBS showed optimism about the progress of business restructuring and strong earnings of Japanese companies. They said they expect Japan's stock market performance to slightly outperform the Standard & Poor's 500 index at the end of 2024 and the first half of next year.

Nomura Securities wrote in a report released last Thursday that "if corporate profits start to rise from April to June or more long-term funds flow into the Japanese stock market, then the upward trend of Japanese stocks may continue."

However, there is also a warning. Nomura Securities stated that in the short term, futures will have a "significant impact" on the Japanese stock market. The company pointed out that as of June 28th, foreign securities companies' net short positions in futures reached 0.017 million contract shares.

Morgan Stanley analysts pointed out that the sustained enthusiasm of individual investors and the promotion of the new version of the Japanese personal savings account will provide stable capital inflows to the market, and liquidity of Japanese stocks is expected to further increase.

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