Conditions for Targeting Undervalued High Dividend Yield Stocks with NISA Growth Investment Limits

What Stocks Are Hideki Wajima Currently Paying Attention to as Undervalued and Neglected?

In early July, the Nikkei Stock Average updated its highest closing price in about four months. Moreover, this time, the Tokyo Stock Price Index (TOPIX) updated its all-time high for the first time in about 34 and a half years. What changes are occurring in Japan’s stock market, and which stocks are promising for the future? We asked economic journalist Hideki Wajima.

◇ Hideki Wajima Economic Journalist【PROFILE】Wajima Hideki

After working as a reporter at Nippon Kango Kakumaru Securities (now Mizuho Securities) and Stock Newspaper Company (now Wealth Advisor Inc.), he joined Radio NIKKEI in 2000. He served as Tokyo Stock Exchange reporter club cap and commentary committee member. In June 2020, he became independent. He currently regularly appears on Radio NIKKEI’s ‘Market Press,’ Tokyo MX TV’s ‘Tokyo Market Wide,’ and Nikkei CNBC’s ‘Morning Express,’ among others. He is a council member of the Japan Technical Analysts Association.

Reasons Why the Update of TOPIX’s All-Time High Should Be Taken Seriously

TOPIX (Topics) has updated its all-time high from December 1989. This is a significant development.

The Nikkei Average is an average stock price composed of 225 stocks from the Prime Market of the Tokyo Stock Exchange (TSE) and is easily influenced by certain stocks. In fact, the update of the highest price in February this year was achieved with the help of certain high-priced stocks and semiconductor-related stocks.

In contrast, TOPIX is composed of the market capitalization of about 2,100 stocks listed on the TSE and represents the overall movement of Japan’s stock market. In other words, with the update of TOPIX’s all-time high, it can be said that Japan has completed the settlement of the ‘Lost 30 Years’ following the collapse of the bubble.

Economically, Japan is in a transitional period from 30 years of deflation to a proper inflation where prices are naturally rising. Corporate profits are overall at record levels, and a positive cycle of wage increases achieved through spring labor negotiations is occurring. Japan’s economy has finally normalized and has begun moving towards new growth.

Are Current Stock Prices a Bubble? The Problem with Media Reports on the Bank of Japan’s Missteps

When stock indices update their all-time highs, there is always the question of ‘Are current stock prices a bubble?’ However, there is no need to worry about this at all. As mentioned earlier, corporate earnings are strong, and stock prices are well-supported. Japanese stock prices have only just reached the starting line and are far from being a bubble. While Japanese stock prices have merely returned to their 1989 levels, during that time, U.S. stocks have increased approximately 16 times for the S&P 500 and about 27 times for the NY Dow.