Analyst: Continuing the recovery trend, the Nikkei Index is expected to reach a new high of 42,500 points by the end of next year

According to the latest information from the Zhitong Finance and Economics APP, since experiencing the largest drop in history on "Black Monday" earlier this month, the Nikkei 225 index has gradually regained lost ground. A Reuters survey estimates that for the remaining time in 2024, the Nikkei 225 index will continue this recovery trend and rise to a historical high by the end of next year.

In a survey of 18 analysts conducted by Reuters from August 8th to 20th, the median forecast shows that the Nikkei index will rise by 7% to 40,000 points by the end of this year, reach 42,000 points by the end of June next year, and hit a record high of 42,500 points by the end of 2025. The Japanese benchmark stock index closed at 37,388.62 points on Monday.

IG market analyst Tony Sycamore stated, "Valuations remain attractive, interest rates remain low, and corporate reforms continue to make progress."

Sycamore mentioned that as the Bank of Japan continues to raise interest rates and global market volatility intensifies, the Nikkei index may fall again in 2024. However, with a clearer outlook on the Japanese yen positions, it is expected that this impact will weaken by the end of the year.

On July 11th, the Nikkei index surged to an unprecedented 42,426.77 points, but with the yen rebounding significantly from the low point set on "Black Monday" in early August, it then dropped sharply.

Following an unexpected shift to a hawkish stance by the Bank of Japan, traders closed out a large number of yen interest rate differential trades, while weak U.S. economic data led to market speculation that the Federal Reserve would need to cut interest rates hastily. The unexpectedly weak U.S. non-farm payroll data at the beginning of this month also catalyzed a 12.4% plunge in the Nikkei index on August 5th.

Subsequently, U.S. macroeconomic indicators improved, and the Bank of Japan took conciliatory measures, leading to a gradual stabilization of the stock market. Analysts generally believe that strong financial performance and government-supported corporate reforms led by the Tokyo Stock Exchange boosted the Nikkei index at the beginning of the year, and these factors are expected to continue supporting the index until next year.

When asked about profit-related additional questions, 11 out of 13 analysts predicted that the performance for the remaining time this year will exceed expectations.

However, analysts have different views on the possibility of more volatility in the near term. Among the 13 respondents, 6 believe that the Nikkei index may further decline by 10% or more by the end of September, while 7 think it is less likely.

Hiroshi Namioka, strategist and fund manager at T&D Asset Management, expects no further decline in the near term. He stated, "Stock prices have already fallen and seem to be undervalued." "Institutional investors with shorter evaluation periods (such as one year) may be unwilling to buy, but for individual investors committed to long-term investment, this significant drop seems to be a very attractive buying opportunity."