TOKYO -- Investors are returning to Japanese blue chips on prospects of enhanced political stability and improving earnings, propelling the Tokyo equities market to the biggest percentage gain among 20 major global benchmarks since the end of September.
The Nikkei Stock Average added another 119 points Thursday to close at 22,539. The Japanese benchmark has gained 2,182 points, or 10.7%, since the final session in September to lead those 20 markets. The index climbed 16 straight sessions at one point during the period, touching a 21-year high.
Japanese stocks lagged among global equities this year until October, rising merely 6% during the first nine months of the year. But the country's ruling coalition led by Prime Minister Shinzo Abe triumphed in the Oct. 22 general election, sparking excitement among international investors.
The Nikkei average has now gained 17.9% year to date, edging Taiwanese, Singaporean and German benchmarks. Japanese equities also are catching up to U.S. peers, which have climbed 18.6% for the year.
The earnings capacity of Japanese corporations entices global market players as well. Outlooks released through Thursday suggest pretax profit at listed domestic companies will grow 13% for the fiscal year ending in March 2018, a Nikkei Inc. review shows.
That projected growth exceeds previous market estimates, and components across multiple industries are on track to record profits. Semiconductor stocks in particular stand head and shoulders above the rest. The likes of Shin-Etsu Chemical and Tokyo Electron lead other Nikkei components in gains since the end of September.
Hiroaki Mino at Mizuho Securities said "institutional investors are flocking to increase allocations" of semiconductor stocks due to the strong growth momentum.
Turkey's stock market climbed at the second-fastest clip over the past month, advancing nearly 10%. Turkish equities scored the highest year-to-date gain of 44.6%. Indian and Philippine shares have surged roughly 25% year to date.
"Money from around the world is flowing into markets with sizable youth populations and growing internal demand," said Toshifumi Sugimoto of Capital Asset Management.
Though central banks in Western economies seek to shift away from monetary easing toward normalization, interest rates remain low as economies worldwide expand. Considering bond prices move inversely to yields, debt securities also are staging a rally. This has produced "Goldilocks" market conditions, helping spur equity indexes in the U.S., Germany, South Korea and elsewhere to all-time highs.
But resource-rich nations are underperforming, with Russia the only one among the 20 markets to decline both year to date and since the end of September.
Russia lacks relative appeal, according to Yoshinori Shigemi at J.P. Morgan Asset Management, who points to the uncertainty whether concerted reductions in crude output can be sustained and prices will keep climbing.
Mexican stocks have slumped 4% since the end of September, the biggest decline among peers, amid concerns over the renegotiation of the North American Free Trade Agreement.