Japan's benchmark Nikkei 225 index has surged past the record it set in 1989 before the country's financial bubble burst, ushering in an era of faltering growth. The index closed Thursday at 39,098.68, up 2.2%. Its previous record was 38,915.87, set on Dec. 29, 1989. By comparison, the Dow Jones Industrial Average, which also hit an all-time high of just over 39,000 Thursday, was at 2,700 points at the end of 1989. The Japanese index now it is back to where it was 34 years ago, the AP reports. That was more than a generation ago at the height of Japan's post-war boom. But this time around, the economy is in recession and nobody's talking about a bubble.
Preliminary measures of exports, manufacturing, services, and other indicators released Thursday suggested continued weakening. The market sank after hitting its 1989 peak, as banks wrote off some $6.65 billion in bad debts. Share prices remained well below the record for many years—dipping below 7,000 at one point before a series of market-boosting measures championed by the late Prime Minister Shinzo Abe in 2013 began nudging them higher. The Nikkei 225 is up 18% so far this year, largely thanks to foreign investors attracted to stocks made cheaper by the weakness of the yen, the Economist reports.
Record gains in corporate earnings for Japanese companies and improved corporate governance have enhanced the appeal of shares in Japanese companies. "As Japanese companies show signs of change I think investors are taking a closer look," Hiromi Yamaji, CEO of the Japan Exchange Group, said Wednesday. He noted that while many older Japanese are reluctant to invest in shares after the trauma of losing their savings when the bubble burst in the early 1990s, younger investors are less wary. "The generation is changing," Yamaji said. (Japan recently lost the title of world's third-largest economy to Germany.)
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