Continued monetary accommodation by the Bank of Japan (BoJ) and hype about corporate governance improvements are the main reasons for the uptrend in equity prices.
Unlike the late-1980s, forward P/E multiple valuations have not become completely divorced from the real economy due to the proliferation of value companies, although the Buffet Ratio is elevated.
Value companies will benefit the most from the Tokyo Stock Exchange's directive to boost their valuations via an improved return on equity, but buybacks can only help in the short-term.
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