Asian investments are undergoing a seismic shift as Japan's stock markets surge and China's make a steady retreat, according to a report in New York Times.

Once dismissed by major investors, the Tokyo Stock Exchange is making a comeback to levels not seen in nearly 35 years. The benchmark Nikkei 225 Index is approaching its record high reached back on Dec. 29, 1989.

Leading the charge is foreign investment in Japan's stock market, which has topped $8 billion over the past two weeks. The Nikkei 225 has gained about 8% for the month and is up over 30% for the last year.

Meanwhile, China stocks are seeing serious declines, reaching lows not seen in nearly a decade. Leading the retreat is Hong Kong's Hang Seng Index, the once-hot market that was the world's worst performing in 2023. It lost 1.6% on Friday to continue the downfall.

So what's leading the role reversal in Asian markets? Polls say changes in investor perception about Japan and China is driving the shift, and Japanese Prime Minister Fumio Kishida is seizing on his country's momentum.

"Now Japan has a golden opportunity to completely overcome low economic growth and a deflationary environment that have persisted for a quarter of a century," Kishida said at a global conference in Hong Kong earlier this week, hailing "Japan's transition to a new economic stage by mobilizing all the policy tools."

Analysts say Japan's recent surge is, in part, a result of anxious Chinese investors looking for alternatives. The world's second-largest economy has turned off investors while Japan, now the third-largest economy, has been making changes to attract foreign investment.

"One of the best things to happen to Japan is China," Seth Fischer, the founder and chief investment officer at Oasis Management, told NYT. "Japan has for 10 years been working on creating a more productive corporate environment and a better place to be an equity investor through consistently trying to improve value. People don't believe the same about China."

Japan China Investment