With the Nikkei stock average climbing past 10,000 points for the first time in more than a year, it seems that some of the pessimism about the Japanese economy has disappeared. The index has followed an upward trend since April when it tumbled to the 7,600 level, the lowest since the bubble burst in 1990.
Significantly, the stock-market recovery has been led by foreign investors who believe that Japanese stocks are undervalued -- a belief supported by a surge in corporate earnings. In the last business year, which ended March 31, 2003, many companies increased earnings as a result of restructuring and other cost-cutting efforts.
Encouraged by foreign players, institutional investors at home have also increased buying with a focus on export-oriented issues. Moreover, better-than-expected real GDP growth in the April-June quarter -- 2.3 percent at an annual rate -- has sparked buy orders for stocks related to domestic demand, such as materials stocks. Also, individual investors have returned to the market, giving it a further boost.