Japanese stocks have been hitting record highs on the back of renewed confidence in domestic politics and the ruling administration’s economic agenda, but experts warn of a disconnect between the stock market and economic fundamentals.
Japan’s Nikkei 225
has notched several firsts in recent days, crossing 56,000, then 57,000 and nearing 58,000, all fueled by the so-called “Takaichi trade,” following Prime Minister Sanae Takaichi’s landslide victory in the Lower House.
Japan’s stock market, which is closed on Wednesday for a holiday, saw the Nikkei hit a high of 57,960 on Tuesday. The index is up about 15% so far this year.
Political optimism has become a key pillar of the rally that has been catalyzed by Takaichi’s strong electoral mandate, said market watchers. Stock investors have welcomed the prospect of higher spending, tax relief and a more assertive economic agenda.
