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Japan’s main stock index hit a new high yesterday, breaking the previous record set 34 years ago.
Tokyo’s Nikkei rose 2.19 percent on Thursday to close at its highest level since the boom of the 1980s.
The blue-chip index closed at 39,098.68, surpassing the previous all-time high of 38,915.87 reached on the last trading day of 1989.
Less than three years after that record was set, the index of the 225 largest Japanese stocks lost 60 percent of its value.
In 1992, the bubble of high real estate and stock prices burst and was followed by a long period of economic stagnation and deflation known as the “lost decade.”
Tokyo’s Nikkei rose 2.19 percent on Thursday to close at its highest level since the boom of the 1980s.
But the consequences of the crisis were not limited to ten years and some argue that they are still being felt today.
A new record showed that the Nikkei “has finally broken free of its shackles,” analysts said.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “The Nikkei has regained its magic, but it has been a long time coming.”
The index was boosted yesterday by a rally in Asian technology stocks sparked by better-than-expected results from US chipmaker Nvidia.
This followed corporate governance reforms that have made Japanese companies more shareholder-friendly.
This has encouraged international investors, including billionaire businessman Warren Buffett, who has been bullish on Japanese stocks.
The chairman and CEO of Berkshire Hathaway has stakes in five companies, including Mitsubishi, a traditional Japanese conglomerate that makes cars but also has a banking division and an energy division.
The stock market rally also followed a series of strong performances by companies listed on the Nikkei index.
And exporters such as Toyota and Sony have been boosted by a weaker yen.
Lindsay James, investment strategist at Quilter Investors, said: “This is a market that has finally broken free of its shackles and is now ripe for greater attention from international investors.”
Shinji Ogawa, co-head of Japan cash equity sales at JP Morgan in Tokyo, said: ‘The number of incoming requests to my team is literally exponential in recent months.
“It’s overwhelming the amount of demand or interest there is in Japan right now.”
AJ Bell investment director Russ Mold added: ‘Company valuations are attractive compared to the US.
“There is the potential to realize a growing flow of dividends thanks to a structural change in the country to make companies more shareholder-friendly.”
The stock market rally came despite official figures last week showing that Japan had unexpectedly fallen into recession late last year.
The country’s economy contracted 0.4 percent in the final three months of last year.
That figure followed a 3.3 percent contraction in the previous quarter.
And Germany unseated Japan from its position as the world’s third-largest economy.