Nikkei's Hot Run Continues; Hits Fresh 34-Year High - 2nd Update

By Ronnie Harui

The Nikkei Stock Average rose to a fresh 34-year high, underpinned by expectations for the Bank of Japan to maintain its super-loose accommodative monetary policy stance and a weaker yen.

Japan's benchmark index advanced 1.5% to 35577.11 on Friday, reaching its highest closing level since February 1990, after hitting near 34-year highs for the past three days. The index gained 6.6% for the week, the largest weekly gain since the week ended March 18, 2022, according to FactSet. Nomura forecasts the Nikkei to trade in a 33000-37000 range for January-March, the brokerage's analysts said in a research note.

Factors behind the Nikkei's rally include the reassurance given by the Bank of Japan that it's not rushing to terminate its negative interest-rate policy, which also supports a weaker yen, Nomura analysts said. Yen weakness typically benefits the overseas earnings of Japanese exporters when repatriated back to Japan.

Among the top performers on Japan's benchmark index for this week, DeNa jumped 13.0%, Fast Retailing and Trend Micro each climbed 12.9%, and Nintendo rose 12.5%, according to FactSet.

Lazard Asset Management said in a recent note that the medium- and longer-term outlooks for Japanese equities looked bright, driven by the themes of improvement in corporate governance and the shift to inflation from deflation.

Progress concerning corporate governance has quickened with the Tokyo Stock Exchange's policy initiative during the past year, and there have been market-friendly changes in management behavior, Lazard said.

Morgan Stanley MUFG Securities notes that the Tokyo Stock Exchange plans to release a list of companies that have disclosed capital-efficiency measures or have such measures under consideration next week. At Japan's coming results season, "under consideration" companies may surprise on the upside with capital-return announcements, it said.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

January 12, 2024 02:23 ET (07:23 GMT)

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