Japan's Nikkei reaching its first all-time high in 34 years comes hot on the heels of new records for Germany's and France's benchmarks this week, with the S&P 500 earlier this month.
In his 'chart of the day' email, Deutsche's Jim Reid shared a chart showing 85 countries' stock markets by the number of years since their all-time high (ATH) and how far they are away from this peak in percentage terms – before today.
The Nikkei surpassing levels last seen in 1989 was a "seminal event", said Reid.
One of his "favourite charts of the year so far" (see larger version below), Reid said Japan's place in the ATH solar system "has been like Pluto now for many years".
But the Tokyo Stock Exchange has seen a strong outperformance recently, and its 2024 performance already stands at 16.8%, the highest of any major developed markets equity index, it was noted
That comes as number of indices reach all-time highs this year, including the DAX, CAC 40 this week and S&P 500 crossing the 5,000 mark for the first time earlier in February.
"The main counter to this is that it’s been driven by a fairly narrow group of stocks," said Reid, noting that the equal-weighted S&P 500 (which includes the same constituents as the main index but each company is allocated a fixed weight of 0.2% of the index total) is still yet to reach its peak from January 2022.
Apart from Japan, Reid noted that a handful of European countries are still comfortably below their ATH from around the 2000 bubble, namely Greece, Italy, Portugal and Finland.
Indeed, the Euro Stoxx 50 index closed at a 23-year high yesterday, but still below its peak from 2000.
Moving inwards on the ATH solar system, there’s a group of around 24 countries that are still below their ATH from the global financial crisis, and another constellation quite close or at their ATH in both years and percentage terms.
"Clearly with dividends, the total return of many of the laggards would still have left investors in positive return territory even if they’re well off their ATH," said Reid.
However, he said their returns are still likely to be weak historically in both nominal and real terms, with Deutsche Bank's annual long-term study finding that the total nominal and real returns for many of these countries, particularly for several in Europe, were decidedly weak in real equity return terms over the 21st century so far.
"Something to bear in mind as an increasing number of markets hit new ATH, many for the first time in several years," concluded Reid.