Japan has taken 34 years to recover its stock market. The country, which was predicted to be a global leader in the late 1980s – a prediction now made for China – had been in an economic stagnation for nearly the same duration.
During the previous record in 1989, the Japanese stock market accounted for 37% of global stock market capitalization, while the U.S. market accounted for 29%.
The key to Japan’s revival lies in its escape from deflation. This directly impacted consumption, which makes up 62% of its GDP. In 2023, wage indexing was around 4%, the highest level in the last 30 years.
Meanwhile, China’s economy has now entered deflation.