In Japan, Politics Propels a Stock Market Rally

“Let’s do it,” Yoshihiko Noda, Japan’s prime minister, said Nov. 14, during a political debate with his opponent Shinzo Abe. Noda meant that it was time to dissolve parliament and hold a new election. Investors heard it as the kickoff to a rally that hasn’t stopped, with the Nikkei 225 stock index gaining more than 50 percent and returning the market to levels not seen since before the 2008 financial crisis. The Nikkei’s best performer since Nov. 14, with a 194 percent gain through April 10, is Tokyo Tatemono, a real estate developer. Nomura, the $445 billion financial-services company, has advanced 146 percent.

Politics and prices are deeply entwined in the rally. Abe and his Liberal Democratic Party won a landslide victory in December on the strength of his “Abenomics” stimulus proposals, which aim to jolt Japan out of decades of lethargy. Even at a four-year high of just over 13,000, the Nikkei is worth only a third as much today as it was at the end of 1989, when Japanese corporations seemed poised to take over the globe. What felt like a permanent recession followed, with years of deflation and anemic growth.