Analysts from leading Wall Street investment banks have predicted further growth in major Japanese stock indices, noting a surge of interest in Japanese company shares, as reported by CNBC.

Last week, Japan’s stock index TOPIX reached a 33-year high, reaching 2188.66 points during the session. This was the highest level since July 1990. CNBC attributed the sharp rise to the return of foreign investors to the Japanese market. On May 29, the Nikkei 225 index also reached its highest point in 33 years. Since the beginning of the year, the indices have increased by approximately 15% and 21%, respectively.

Goldman Sachs strategists noted in a research note that foreign investors are still undervaluing Japanese stocks. They believe that Japanese stocks are benefiting from “structural changes” in the country’s economy. The experts also highlighted the launch of the Tokyo Stock Exchange’s new structure, which aims to boost shareholder returns, as another positive factor.

“If progress meets investor expectations, Japanese stocks could demonstrate steady growth in the medium term,” stated Goldman Sachs strategists.

The bank’s experts predicted that Japan’s TOPIX stock index will reach 2,200 points by the end of the year.

Strategists Masashi Akutsu and Tony Lin from Bank of America (NYSE:BAC) stated last week that they see opportunities for further cash inflows from foreign investors into stocks and raised their year-end forecasts for Japanese indices. The experts believe the TOPIX index will rise to 2,300 points by the end of 2023, representing a 6% increase from current levels. They also predicted that the Nikkei 225 index will grow to 32,500 points, with a bullish outlook allowing the benchmark to reach 33,500 points, indicating a 6% growth potential.

Earlier we reported that the bearish view of the stock market has not changed.