Japan's NIKKEI Index Jumps to 34-year High

Japan's NIKKEI225 index recorded a series of records that are the highest in 34 years and ended the quarter with a gain of 21%, driven by a significant decline in the yen and strong corporate results.

At the end of last week, warnings began from major international banks such as JP Morgan and Morgan Stanley, as analysts from the two banks said that Japanese stocks with strong performance are exposed to losses due to the accumulation of long buying positions in large companies with high liquidity, by a large segment of the investors, which will prompt them to reduce it based on Quantitative Analysis by JP Morgan.

As for Morgan Stanley analysts, they believe that momentum has begun to decline in the Japanese market, as the NIKKEI225 index gained only 2.5% in March, compared to gains of more than 6% in February and 9% in January.

As for the heavy stocks, Morgan Stanley analysts expect them to decline, such as the chip manufacturer “Tokyo Electron”, which has risen by 56% since the beginning of the year, “Toyota Motors”, which has risen by 49%, and the largest bank in Japan “Mitsubishi UFJ”, which has risen by 30%, knowing that the index’s earnings multiple is “NIKKEI225” stands at 21 times, which is higher than the average of the past ten years, and is similar to the earnings multiple of the S&P 500 index, which means that Japanese stocks have become expensive.