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The Japanese Stock Market – Why is It Booming?

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The Japanese stock market has witnessed a great boom recently, with stock prices rising to new highs due to many foreign investors buying Japanese stocks using their share dealing accounts. The fairly stable inflation rate within the region has boosted investors’ confidence to invest in the Japanese stock market. Several other important factors have contributed to this boom in the Japanese stock market recently. This work shall examine these important factors that have contributed to the boom in the Japanese stock market today. 

Japanese Stock Market Sees a great boom in 2023

The Japanese economy has been on a slow but steady recovery after the pandemic, resulting in a boom in the Japanese stock market recently. The country’s  GDP growth rate rose to 2.7% YoY in the first quarter of 2023, marking the fastest growth pace in two years. The positive economic growth in the region has favored the stock market, leading to a  boom in the Japanese stock market recently. 

The Japanese Stock Market Index known as Nikkei 225 index has been up by over 25% in 2023 and has seen its value more than doubled since the pandemic low in 2020. The index reached a record high at 33,700 in June 2023, before pulling back slightly.

There are even more positive signs for the Japanese economy as corporate profits are expected to continue rising through the year. The earnings per share for Japanese companies are expected to grow by at least 8.8% in the coming years. 

A survey of the Japanese stock market shows that foreign investors have been major buyers of Japanese stocks and have bought a net amount of $120 billion worth of Japanese stocks since 2012 through the best stock brokers in their regions. 

Additionally, several other important reasons seem to have contributed to the Japanese stock market boom which we have discussed below. 

Important Factors Favoring the Japanese Stock Market Boom?

  1. a) Corporate governance reforms: In recent years, the Japanese government has enacted many reforms aimed at improving corporate governance in Japan. These reforms have made it easier for shareholders to hold companies accountable and have led to a greater focus on shareholder returns.
  2. b) Abenomics: The economic policies of Japanese Prime Minister Shinzo Abe, known as Abenomics, have also played a role in the stock market A

This policy has dwelled on three major areas such as monetary easing, structural reforms, and fiscal stimulus. These policies have helped to boost economic growth and corporate profits, which has in turn led to higher stock prices.

  1. c) Fairly stable inflation rate: Despite the menace of high inflation across the globe, Japan has maintained a fairly stable and lower inflation rate compared to other countries including US, UK, and EU with higher inflation rates today. Its inflation rate rose to 3.5% in April. Despite being its highest level ever in 2023, it is still low compared to other regions. This has boosted investors’ confidence to invest in the Japanese stock market today. 
  2. d) Foreign investment: Foreign investors have been major buyers of Japanese stocks in recent years. This is due in part to the strong performance of the Japanese economy, as well as the relatively low valuation of Japanese stocks compared to stocks in other developed markets.


The Japanese stock has remained attractive to investors in recent years. The country’s fairly stable inflation rate has so much boosted investors’ confidence to buy Japanese stocks. While the future looks so bright for the Japanese economy, investors should always be aware of the risks associated with stock investments when investing in the Japanese stock market today.