The moment drew a spontaneous round of applause on the trading floor at Nomura in Tokyo.

Decades on from Japan's bubble era economy, the Nikkei stock index hit the 39,000 mark.

The 34 years it's taken to regain the peak is a record for any major market.

And it all comes despite recession at home, conflict around the world, and a global inflation shock.

The Nikkei was Asia's best performing major bourse in 2023, and is now up around 17% just this year - almost three times the gains for the U.S. Nasdaq index.

No single factor has driven the surge.

A cheap yen has made Japanese stocks more affordable for overseas buyers.

Corporate governance reforms and robust earnings have restored optimism over the country's big firms.

That's lured back major investors like Warren Buffett.

And some analysts say Japanese stocks just look cheap, when measured by price-to-earnings ratios - a common metric for valuations.

Back in the bubble era the ratios went above 50, now they average barely more than 20.

The firms behind the rally also look very different from the banks and property giants that once dominated Japan.

Big gainers include Uniqlo-parent Fast Retailing, and chip gear makers Advantest and Tokyo Electron.

Put it all together, and many investors bet the rally has further to run.

A Bank of America survey of fund managers showed almost one in three expect more strong returns for Japanese stocks this year.

Analysts at the bank say Japan is "by far, the favourite market in the region".