In the US, the average bear market historically lasts about 14 months. Stocks return to previous highs three to five years later. In contrast, Japan has waited three decades for its key stock index to revisit its record high of December 1989.
On Monday, the benchmark Topix index surpassed 2,110 points, nearing its highest level back then. Fundamentals support further advances. But Japanese investors have painful memories of the 1989 market peak: the bursting of the “bubble economy” followed. It will take nerve as well as conviction to go higher.
Some gains may be temporary. Investor sentiment rallied as the dollar strengthened last week. A weaker yen has long been taken as a signal to buy shares in exporters. The value of profits made overseas receives a boost when booked at home.