Prime Minister Shinzo Abe's focus on reviving confidence to spur economic growth means he will drive the Nikkei 225 stock average toward 22,000 next year, a level unseen since 1996, according to Barclays PLC.
"If the audience is Mom and Dad, the main game is improving the fortunes of the Nikkei," Nick Wright, the bank's head of equities and co-head of trading for the Asia-Pacific region, said in an emailed response to questions last week. "The more confident people feel in general about the future, the more likely consumers will spend, the more likely businesses will invest, the more likely entrepreneurs will engage, and the more activity in general increases. The Nikkei is an obvious and visible sign that things are getting better."
Abe's willingness to push for unprecedented monetary easing helped turn the Nikkei 225 — first published in 1949 — into the world's best-performing major stock index this year. Shares have climbed as the Bank of Japan's decision to double the monetary base sent the yen tumbling, boosting corporate profits for exporters. It also held government bond yields at the lowest levels in the world, enhancing the allure of equities.