Why Korea Is Becoming the New Japan

Japan's Topix index has reached a new all-time high, marking the end of a 35-year bear market. This recovery has yielded significant returns, with investors seeing gains of 400% from the market's bottom and 65% since 2023, highlighting a substantial turnaround in the Japanese equity market.

Analysis

Why Korea Is Becoming the New Japan This article is for subscribers only. Thirty five years and five months. That’s how long it took Japan’s Topix index to hit a new high and finally mark the end of the longest bear market in history. If you’d invested at the bottom, you’d be up 400% (at its worst the index was 80% off its highs). But even if you’d paid attention to value obsessives like me in 2023, you’d be up 65% by now. Not quite as good as the S&P 500 (74%) but really not bad at all. Japan's Topix index has achieved a significant technical milestone by reaching a new all-time high, officially concluding a bear market that persisted for 35 years and five months. This long-term recovery has delivered substantial returns, with the index appreciating 400% from its trough, where it had fallen as much as 80% from its prior peak. More recently, the market has exhibited strong momentum, generating a 65% return since 2023. While this performance is robust, it modestly trails the 74% gain of the S&P 500 over the same period, providing a critical benchmark for global equity performance. The strongly positive sentiment signal underscores the importance of this breakout, which has shifted investor perception and market dynamics for Japanese equities.

Key Decisions for Investors

• Investors should re-evaluate their strategic asset allocation, as the end of Japan's 35-year bear market represents a major structural shift that may warrant increased exposure to Japanese equities.
• While the recent 65% gain is compelling, it is crucial to benchmark this against the S&P 500's 74% return, prompting a deeper analysis of relative value and growth drivers before reallocating capital from US markets.
• Given the article's title hints at a comparison, investors should monitor for similar deep-value, long-term turnaround dynamics in other developed or emerging markets, such as South Korea, as a potential thematic play.