The Nikkei 225 has been on a tear, closing higher for a record-breaking 16th straight session and setting a fresh 21-year high on Tuesday.
The share average’s ongoing win streak — it was up 0.05 percent at 12:13 p.m. HK/SIN on Wednesday — has been something of a feat. Until Monday, the Nikkei 225’s previous record streak was a 14-day period set on Jan. 11 1961.
The current record is also the longest streak of any kind — winning or losing — made by the Nikkei 225. That had last been set in May, 1954, when it fell for 15 continuous days.
This time around, the index had climbed in the lead up to Japan’s Oct. 22 lower house elections on investor expectations that Prime Minister Shinzo Abe’s ruling coalition would win.
Abe’s subsequent resounding win pointed to the status quo being retained in terms of the prime minister’s Abenomics program, which involves the “three arrows” hyper-easy monetary policy, fiscal stimulus and structural reform. Critics have long lamented that the last of those three arrows has not taken place at a fast enough pace.
Still, some analysts said Abe’s consolidation of power at the recent election implied good news for equity markets.
Although near-term profit-taking was likely, the election “result is fundamentally positive for the equity market as political stability should be restored,” analysts at Bank of America Merrill Lynch said in an Oct. 23 note.
They added: “[The] Japanese equity market is backed by solid fundamentals and long-term positioning remains light. We believe the election result reduces one key risk factor of political stability and supports the equity market over the medium term.”
Other factors that have driven the Nikkei 225’s rally include strength in the U.S. stock markets, depreciation in the yen beginning mid-September and the upturn in both the global and domestic economy, Masaki Motomura, an analyst at Nomura Securities, told CNBC.