Japan’s digital stock hit an all-time high on Friday, with the Nikkei 225 rising over 7 percent, a key indicator of investors’ confidence in the economy.
The Nikkeigin rose 2.9 percent and the Shanghai Composite index climbed 1.9%.
“There are several reasons why the Nikkes and the S&P 500s have hit all-year highs.
One of them is that there has been a strengthening in the global economy,” said Neil Sheehan, an analyst at Jefferies.
“The other reason is that the Chinese economy has been expanding at an incredibly fast pace, particularly in the last couple of years.
That is making it more attractive to the Japanese economy, which is why there is such a strong demand for Japanese stocks.”
China’s economic slowdown has been an economic boon for Japan.
It has been exporting goods to the United States, and is seeing a surge in exports of electronics, software and robotics.
Japan has also been building new manufacturing plants in the United, Australia and the United Kingdom.
The economy has also taken a hit from a plunge in the yen, which has dropped nearly 25 percent against the dollar since March.
Japan is one of the biggest exporters of Japanese yen-denominated bonds, and its economy is expected to grow at 3.4 percent this year.
The country also has been building up its domestic financial sector.
“We’re seeing a lot of domestic demand for these products and we’re seeing them take off in a very rapid manner.
There is a lot to be optimistic about for the Japanese stock market, especially in the longer term,” said Mark Gubler, chief market strategist at RBC Capital Markets.”
There’s been a strong uptick in corporate profits and the economy is really picking up,” said Michael Pachter, chief investment strategist at Wells Fargo.
“This is a good sign that the economy can absorb some of the damage caused by the Chinese slowdown.”
Pachter expects the economy to grow 1.4 to 1.5 percent in the third quarter, but that could rise as much as 2.2 percent in 2018 and 2019.
Japan’s government has been encouraging investors to hold on to their money.
On Thursday, Prime Minister Shinzo Abe announced a 1 percent interest rate cut on household loans and said the government would allow investors to buy stocks on its exchange, a move that would benefit the nation’s biggest stock exchange.
“In the near term, the Japanese government’s stimulus has paid off, and we should see more stimulus in the coming years,” said Pachters co-investment strategist at Jeffries.
“But we’ll also be watching the outlook for corporate earnings, because it’s a key driver of the economy.”
Japan has been working to increase domestic demand, with a variety of measures, including tax cuts and corporate tax increases.
The government is also easing regulations on consumer spending, and it plans to increase the number of public sector employees.