The Japanese stock market has completely surged.
On February 22, the Japanese stock market continued to rise, with the Nikkei 225 Index breaking through 39000 points at one fell swoop, exceeding the historical peak set on December 29, 1989 during the foam economy period. By the end of the day, the Nikkei 225 Index had risen 2.19% to 39098.68 points, a record closing high, and has risen more than 16.8% year to date.
Regarding the outlook for the future of the Japanese stock market, CICC pointed out in its latest report that there is a possibility for the Nikkei Index to break through the 40000 point integer mark within 2024 due to the inflow of foreign funds, the continued mild growth of the global and Japanese economies, the implementation of the "wage and price increase cycle" in Japan, the continued implementation of the "daily special valuation" policy, and changes in the "savings to investment" of Japanese households.
In terms of A-shares, securities firms saw a sudden change in the afternoon, with Everbright Securities, Huachuang Yunxin, Shouchuang Securities, Huaxin Shares, Jinlong Shares and others leading the way in gains. The Shanghai Composite Index rose by 1%, the Shenzhen Component Index rose by 0.6%, and the ChiNext Index rose by 0.19%. China National Offshore Oil Corporation (CNOOC) rose more than 4%, its stock price reached a new historical high, while PetroChina rose more than 4% and Sinopec rose more than 2%; In terms of Hong Kong stocks, China National Offshore Oil rose more than 5% to a historic high, and China National Petroleum Corporation's shares rose more than 5%.
In addition, there is also big news coming from the United States. On February 21st Eastern Time, American chip giant Intel held its first wafer foundry event in San Jose, California. US Secretary of Commerce Gina Raimondo stated at the event that if the US wants to "lead the world" in the semiconductor industry, it needs to further increase government subsidy investment, such as enacting a second Chip Act.
Japanese stocks broke through 39000 points
On February 22, the Japanese stock market continued to rise. The Nikkei 225 Index once exceeded 39000 points in the day, surpassing the historical peak set on December 29, 1989, during the foam economy period. By the end of the day, the Nikkei 225 Index had risen 2.19% to 39098.68 points, a record closing high, and has risen more than 16.8% year to date.
Today, the sharp rise of the Nikkei 225 index was mainly driven by chip stocks, with Screen up 9.9%, Disco up over 9%, Tokyo Electronics up 5.6%, Advantech up 6.3%, Renesas up over 5%, and Lasertec up 5.3%.
In its latest report, China International Capital Corporation (CICC) reviewed the bull market of Japanese stocks and concluded that the ten-year rise in Japanese stocks is due to an increase in EPS (earnings per share), and is attributed to Japanese companies actively going global, seizing the global market, and continuously improving corporate profits.
The reason for the rapid growth of Japanese stock EPS is that the performance of Japanese companies is a global economic logic, not a Japanese economy; The profitability of Japanese companies continues to improve.
According to data from a report by China International Capital Corporation (CICC), from early 2013 to February 2024, the Nasdaq, one of the world's major stock indices, performed the strongest (up over 400%), followed by the Nikkei and S&P 500 (up about 270%), followed by the Tokyo Composite Index and Dow Jones Index (up about 200%).
Sword finger 40000 points?
Regarding the outlook for the future market of Japanese stocks, CICC pointed out in its report that there is a possibility for the Nikkei Index to break through the integer level of 40000 points within 2024. Compared to the over 38000 points of the Japanese stock market in 1989, the current valuation level of the Japanese stock market is more reasonable, with better profitability, more globally competitive enterprises, and better corporate governance.
From the perspective of investor structure, foreign institutional investors are currently the largest holders and traders of Japanese stocks, and when foreigners actively buy, Japanese stocks rise rapidly; The Bank of Japan has held approximately 7% of Japanese stocks in the past 10 years, and CICC believes that there is no need to worry about selling risks within 1-2 years; The active implementation of stock repurchases and daily special valuations by enterprises in the past 10 years has played an accelerating role; Individual investors have continued to sell Japanese stocks after the collapse of the foam economy, but they hold a lot of cash. If they can achieve "from deposit to investment", it will give impetus to Japanese stocks.
China International Capital Corporation (CICC) stated that in the context of inflation, Japan is more suitable for increasing leverage and purchasing anti inflation assets (Buffett's actions are also the same). In history, the impact of the Bank of Japan's interest rate hike on Japanese stocks has been relatively limited.
CICC reminds that it is bullish on Japanese stocks in the long term, but still needs to pay attention to the risk of Japanese stock pullbacks in the short term. The Japanese economy is susceptible to external influences. Over the past half century, every time the United States fell into a recession, the Japanese economy also fell into a recession. If the US economy falls into a recession in the future, it is highly likely that the Japanese economy will also be "brought" into a recession.
Big news suddenly spreads in the United States
On February 21st Eastern Time, American chip giant Intel held its first wafer foundry event in San Jose, California. US Secretary of Commerce Gina Raimondo stated at the event that if the US wants to "lead the world" in the semiconductor industry, it needs to further increase government subsidy investment, such as enacting a second Chip Act.
US President Biden officially signed the Chip Act (CHIPS) in August 2022, promising to provide over $52 billion in government subsidies for research and production of American semiconductors, as well as investment tax credits for chip factories.
But at Wednesday's event, Raymond stated that a single Chip Act alone is not enough to regain the leadership of the semiconductor supply chain in the United States.
"It needs to be clear that we cannot and do not want to manufacture everything in the United States. We do not want all chips to be produced in the United States. This is not a reasonable goal," Raymond added. "But we do need to diversify our semiconductor supply chain and have more manufacturing in the United States, especially cutting-edge chips, which is crucial for artificial intelligence."
Raymond also mentioned that she has spoken with Sam Altman, CEO of OpenAI, who is working hard to secure approval from the US government for a large-scale joint venture to promote global manufacturing of artificial intelligence chips.
Raymond revealed that when she talked to other clients in the industry, they predicted an incredible number of chips they needed.
Since the passage of the US Chip Act in 2022, although more than 170 chip companies worldwide have applied for subsidies under the Act, the US Department of Commerce has only issued three smaller subsidies.
Earlier this week, chip manufacturer GlobalFoundries received the third and largest grant of $1.5 billion (approximately 10.8 billion yuan) under the bill to date.
As an American chip giant, Intel is also one of the companies applying for funding subsidies from the Chip Act. Earlier this month, it was reported that Intel had planned to postpone the completion time of its new Ohio chip factory to 2026.
External speculation is that the delayed implementation of US government subsidies is one of the reasons for delaying Intel's factory construction progress.
However, recent reports have quoted informed officials as saying that the Biden administration is negotiating over $10 billion in subsidies to Intel.
At Wednesday's event, Intel CEO Pat Kissinger stated that the announcement of receiving subsidies will be released "soon".