{"id":5638,"date":"2023-11-13T09:06:04","date_gmt":"2023-11-13T01:06:04","guid":{"rendered":"https:\/\/www.umtradings.com\/?p=5638"},"modified":"2024-02-05T07:54:26","modified_gmt":"2024-02-05T07:54:26","slug":"given-japans-lost-decades-why-the-nikkei-225-index-still-hit-new-highs-this-year","status":"publish","type":"post","link":"https:\/\/www.umtradings.com\/th\/given-japans-lost-decades-why-the-nikkei-225-index-still-hit-new-highs-this-year\/","title":{"rendered":"Why Nikkei 225 Index Still Hit New Highs This Year?"},"content":{"rendered":"
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Why the Nikkei 225 Index Surpassed Expectations in 2023?<\/strong><\/h1>\n\n\n\n

When it comes to the Japanese economy, that clich\u00e9d comment always pops up in our mind: “The Lost Decades<\/a><\/strong>“. Since the collapse of the bubble economy in the 1980s and 1990s, the Nikkei 225 Index has been sluggish. <\/p>\n\n\n\n

Especially when the COVID-19 epidemic broke out a few years ago, the Index once fell to a low of more than 16,000. Everything seems to indicate that the “lost decades” of Japan’s economy will continue.<\/p>\n\n\n\n

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The Nikkei 225’s Remarkable Journey<\/strong><\/h2>\n\n\n\n

The Nikkei 225 index<\/a>, however, defied all logic by making a turnaround just after it hit bottom at the beginning of the recession. <\/p>\n\n\n\n

This year, on 19th of May, the Nikkei 225 index went beyond 30,800 points, achieving its highest level since 1990. That said, the Japanese stock market has kept rising ever since. It was as high as 33,000 just in June, beating most stock markets throughout the globe.<\/p>\n\n\n\n

Why has the Japanese stock market, which has been in the doldrums for many years, been able to come back to life and continue to rise this year? After this round of surge, can the Nikkei 225 Index further continue its rise in the future? This article will take you to find out.<\/p>\n\n\n

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The low financing cost of Japanese Yen<\/strong><\/h2>\n\n\n\n

The exchange rate is usually crucial to a country’s stock market. For many non-U.S. currencies, once the domestic currency exchange rates against the U.S. dollar rise, the stock market prices will rise accordingly. <\/p>\n\n\n\n

China’s A-shares<\/a> are a typical example. Once the RMB exchange rate against the U.S. dollar rises, the performance of A-share market will tend to start an upward trend. But Japan\u2019s stock market is exactly a counterexample. <\/p>\n\n\n\n

In the past five years (as of the time of writing), the exchange rate of the Japanese yen against the US dollar has fallen by approximately 23.75%, but the Nikkei 225 index has increased by approximately 38%, obviously showing a negative correlation.<\/p>\n\n\n\n

The reasons for this phenomenon mainly lie in two aspects:<\/p>\n\n\n\n