The increase was driven by tech shares, which have driven much of the Nikkei’s increase. Tokyo Electron, which makes semiconductors and chipmaking equipment, is up by over 140% over the past year. The Nikkei 225 was Asia’s best performing market in 2023, recording a gain of more than 25%.

Foreign capital is piling into the Japanese market, following famed investors like Berkshire Hathaway CEO Warren Buffett, who expanded his holdings of major Japanese trading houses last year. BlackRock, the world’s biggest asset manager, and Amundi Asset Management, Europe’s largest money manager, expect earnings growth and changes in corporate keep the strength going, according to Bloomberg.

One reason for optimism could be strong performance from Japanese firms. Earnings for the last quarter of 2023 were 45% higher year-on-year, according to Goldman Sachs analysts. The weaker yen is also playing a role, making Japanese exports cheaper while also increasing the value of profits repatriated from overseas.

And then there’s a push for better corporate governance. The stock exchange is pushing the country’s sprawling conglomerates, known as keiretsu, to streamline their organizational structure. It’s also encouraging companies to disclose plans to boost their capital efficiency.

Analysts think the Nikkei’s rise isn’t over. The Nikkei breaking 40,000 “is likely to be a more bullish signal rather than fueling any concerns of Japanese stocks being overbought,” Charu Chanana, the head of FX strategy at Saxo, told Bloomberg.

Correction Mar. 25, 2024: A previous version of this article miscalculated the length of time between Japan’s stock market records.