Last week, the Nikkei index in Japan broke through its historical high, surpassing the peak set in December 1989. Daniel Hurley, an expert in emerging market and Japanese stock portfolios at Fidelity, stated that overall, the outlook for the Japanese stock market remains strong. The forward price-to-earnings ratio for the next year is around 16 times, indicating that valuations are not too high. With the support of a weak yen and high shareholder returns, corporate profit growth is expected to remain robust. In fact, if corporate governance reforms continue to have a positive impact, returns are expected to exceed market expectations. Fidelity pointed out that with the support of multiple factors, the Japanese stock market has recorded significant gains over the past 18 months. These factors include strong global economic growth, the recovery of the domestic semiconductor industry, Japan's NISA (Individual Savings Account) plan encouraging investment over savings, accelerated corporate governance reforms, the return of inflation, and sustained economic growth. One important factor is the weak yen which benefits Japanese companies that rely on exports and have a large weighting in the Nikkei index. While the index has risen by over 50% in the past three years and 20% in the past year when measured in yen, the gains have been limited when converted into US dollars. Therefore, while the weak yen is a strong driver of stock market gains, investing in Japanese stocks may not yield significant returns for foreign investors. Nevertheless, with increasing wages in Japan and the first signs of a healthy domestic economy and sustained growth in 30 years, the outlook for the Japanese stock market remains positive. It is important to pay attention to the policies of the Bank of Japan, especially the impact of monetary policy normalization on the yen. The central bank's stance has been dovish and cautious. With the upcoming general election in Japan, there may be some uncertainty in domestic politics, but historically, the impact of elections on the stock market has been relatively minor.