Alakshendra Singh, Pune
The main driver of Japan’s benchmark Nikkei Stock Average’s Monday 40,000 milestone rise was increases in semiconductor companies, which were bolstered by expectations of increased demand for generative artificial intelligence.
At 40,109.23, the index closed 0.5%, or 198.41 points, higher than it had closed on Friday. Equities associated with semiconductors, including Tokyo Electron and Advantest, which manufacture equipment, led the increase, climbing 2.4% and 3.7%, respectively.
The Nikkei index has been surging for more than a year, propelled by a mix of robust corporate results, a declining yen that benefits exporters and an infusion of foreign investors seeking an escape from China’s stagnant markets. On Monday, the index finished up 0.5% at 40,109.23.
“I think it’s reasonable to anticipate that the Nikkei will increase to 55,000 by the end of 2025. I [know] I sound more like a stockbroker from the bubble era than a gentleman, but I can’t contain my joy,” financial services professional Jesper Koll of Monex Group said to CNBC on Monday.
By the term ‘bubble era’, Koll is referring to the previous record held by Nikkei. In 1989, the Nikkei had reached an unprecedented 39,915.87 points. This ‘bubble’ then proceeded to burst the next year, resulting in Nikkei losing half its value. It sent the economy into crippling stagnation and Nikkei has been fighting back ever since.
Even with this boom, the larger narrative does paint a confusing picture. Big names like Toyota Motor and Fast Retailing plummeted. At the end of Monday’s morning trading session, over two-thirds of the companies listed on the Prime section of the Tokyo Stock Exchange had experienced a decrease.
According to Tomoichiro Kubota, senior market analyst at Matsui Securities, investors are placing bets on the artificial intelligence boom spurring semiconductor spending and benefiting Japanese manufacturers. The increase came after a Friday stock market boom in the United States during which chipmaker Nvidia’s market capitalization crossed $2 trillion.
All this is taking place as people await China’s most crucial political event starting on Tuesday, China’s National People’s Congress. Behemoth companies, Investors, and the public hold their breath in anticipation as they expect policies to tackle the slow economy.
Most Asian stocks have been up but as seen before a sudden rise in the market can go sideways pretty quickly.