The Nikkei 225 is the primary and highly regarded index for Japanese stocks. Comprising the top 225 blue-chip companies traded on the Tokyo Stock Exchange, the index's three largest components include Fast Retailing, the parent company of Uniqlo; Tokyo Electron, a manufacturer of semiconductor production equipment catering to clients like TSMC and Samsung; and Advantest Corp, a provider of semiconductor testing solutions.
In 2024, The Nikkei saw a record rally in March closing at a record high of above 40,000, exceeding the all-time high set 34 years ago. Naturally, investors are asking two major questions:Will Japan’s stock market continue to climb and for how long?
Current Market Situation
In the current year, the Japanese stock market has notably outperformed many of its counterparts in developed markets. In 2024, the SGX Nikkei 225 Index Futures contract has witnessed an increase of 13.44% in total return, surpassing the S&P 500's gain of 5.73% as of the market close on April 17th. This surge follows robust wage growth observed during spring labor negotiations, prompting the Bank of Japan to raise interest rates for the first time since 2007 and discontinue its Yield Curve Control measures in March.
Several structural factors contribute to the strength of the Japanese stock market, including enhanced corporate profitability, reforms in corporate governance leading to increased returns for shareholders, tax-free investment opportunities through the Nippon Individual Savings Account program, and the resurgence of healthy inflation and wage growth.
Nikkei 225 Market Composition
One notable aspect of the Nikkei 225 Index is its significant exposure to artificial intelligence (AI) due to its heavy representation of technology companies, which make up 50.27% of the index. This exceeds the S&P 500's technology weighting of 29.83%. We believe this positions Japan favorably to capitalize on AI advancements and a potential recovery in the semiconductor industry. The AI trend is anticipated to continue driving growth for semiconductor materials (such as photomasks and silicon wafers) and equipment manufacturers, which are prominent in Japan.
Additionally, the consumer goods sector, comprising 23.69% and ranking as the second-largest sector, is expected to benefit from the resurgence of inflation and wage growth. We foresee a gradual shift in both consumer and business spending, investment, and saving behaviors.
Capitalizing On the Opportunity
Nikkei 225 futures is the first Asian Stock Index Futures that launched from SGX, in its early launch in 2014, the SGX Nikkei 225 Futures and options were the fastest-growing contract globally at 10.2 million. In 2022, the SGX Nikkei 225 Index Futures volume continued to increase 17%, while SGX Nifty 50 Index futures volume gained 14%.
Among the exchanges, SGX hosts one of the most FX products.
Nikkei 225 Index Futures
Nikkei 225 Index (Trade at Index Close) Futures
Nikkei ESG-REIT Index Futures
Nikkei Stock Average Dividend Futures
USD Nikkei 225 Index Futures
Start Trading with Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us, opening additional trading avenues.
Expect streamlined processes and an easy-to-use interface designed for minimal latency, accompanied by our team's round-the-clock availability on trading days to provide assistance for all your trading needs.
