Japan's Nikkei recovery after governance reforms (2023–2024)
After trading below its 1989 peak for 34 years, Japan's Nikkei 225 index surged past 39,000 in February 2024, finally surpassing the all-time high set during the Japanese asset bubble. The rally was driven by Tokyo Stock Exchange governance reforms launched in 2023 that pressured companies to improve capital efficiency and return cash to shareholders—the same template South Korea's Value Up program explicitly copied.
Japanese equities attracted record foreign inflows as investors embraced the governance reform thesis. Warren Buffett's high-profile investments in Japanese trading houses helped legitimize the trade globally.
The Nikkei continued climbing through 2025, demonstrating that governance reforms can durably close a valuation discount. The "Japan trade" became a template for emerging market reform stories worldwide.
South Korea explicitly modeled its Value Up program on Japan's reforms and is now experiencing a similar—but faster—rerating. The KOSPI's price-to-book ratio has risen from 0.8 to 1.25, mirroring Japan's trajectory. The parallel suggests the governance component of Korea's rally has a proven precedent, though Korea's simultaneous semiconductor boom makes the dynamics more complex.