JPMorgan Chase: Both major Japanese stock indexes hit new highs, indicating that Japanese stocks are breaking free from correction and starting a new bull market

Will the Japanese stock market usher in a new upward cycle? Last Thursday, the Japanese stock market witnessed a historic moment, with the Nikkei 225 Index and the TOPIX Index closing at 40,913.65 points and 2,989.47 points respectively, hitting new highs in 34 years. In a report released by JPMorgan Chase on July 5th, it pointed out that since hitting a bottom on June 17th, the Japanese stock market has broken through the previous consolidation range, showing a new upward trend, and it is expected that the Japanese stock market will start a new upward cycle. JPMorgan Chase highlighted three positive factors: Firstly, investors' interest in the Japanese stock market is increasing, and the outflow of funds from major ETFs has stopped. Secondly, the trend of upward revisions in corporate profit forecasts is evident, and the improvement in economic indicators is reflected in the index's reversal. Furthermore, despite the continued weakening of the yen, considering the prospect of the Bank of Japan's normalization of monetary policy, the downward pressure on the yen has eased, and the correlation between the yen's depreciation and the stock market's rise is being restored. Moreover, JPMorgan Chase stated: The rise in the Japanese stock market is not only driven by a few stocks, but the scope of the rise is expanding, including semiconductor-related stocks, finance, wholesale, automotive, and other industries. The rise in Japanese stocks to a certain extent benefits from structural changes, including efforts by companies to improve capital efficiency in response to governance reforms, changes in cost transmission behavior as wages rise, and the strengthening of corporate investment willingness. Additionally, JPMorgan Chase predicts that if the current upward trend continues, large-cap stocks will benefit first from the inflow of funds from overseas investors, followed by a rotation into mid-cap stocks