The Tokyo Stock Exchange Mothers Index, which tracks Japan’s startups, has climbed back up this year to finally match an earlier high set in 2006.
Bloomberg reported that the startup index has gone up by more than 50 percent this year, despite the coronavirus pandemic. Some of Japan’s other top indexes, such as the benchmark TOPIX and the Nikkei 225, are still fighting to recover from pandemic losses.
The NASDAQ-style Mothers Index has soared along with an influx of retail investors, Bloomberg said. There are approximately 322 startups and smaller companies in the index, which is now the No. 2 best-performing equity index in the Asia-Pacific region. It includes everything from biotech to digital transformation firms.
“Investors could be focusing their attention on Mothers because the mainstream indices are stuck,” said Makoto Sengoku, a market analyst at Tokai Tokyo Research Institute Co. He told Bloomberg that “money is flowing and keeping Mothers strong.”
“Investors will need to carefully pick individual companies,” said Naoki Kamiyama, chief strategist at Nikko Asset Management Co. in Tokyo. He told Bloomberg that “these companies will need to embrace the opportunity, but not overextend themselves.”
He added that the companies in the index will also have to perform post-pandemic in order for Mothers to continue outpacing Japan’s other stock gauges.
Meanwhile, the climate for small businesses looks promising in the U.S. In fact, new businesses are being created at a faster clip during the COVID-19 pandemic than they have been in years. Applications for employer identification numbers have grown to over 3.2 million this year through mid-September, compared to the 2.7 million applications in 2019. A Wall Street Journal report said that excluding gig workers, new filings for people who intend to employ others were up 12 percent through mid-September.