On December 29, 1989, the Nikkei Index stock market index peaked at 38,915.87. As of March, 29, 2016 it stands at not even half of that amount at 17,103.53, which means that those that have invested a substantial amount of their savings into the Nikkei Index or a basket of stocks that are part of that index, have seen their investment eviscerated over the last twenty-six years. Japan is not some third world country, as it was for a considerable period of time, the second largest economy in the world, second only to America, and even today, it stands as the third largest economy worldwide. The fact that the Nikkei index has done so poorly in recent times, should be a wakeup call to stock market pundits worldwide, to which, it can be said, that stock markets price in anticipated future events and when that future looks rather bleak for GDP growth, along with aging demographics, little or no population growth, and declining labor participation rate in the workforce, than the stock market will surely reflect those facts.
For instance, as reported by socialdemocracy21stcentury.blogspot.com, the decade of 1980-1989 saw Japan's annual GDP growth of 3.95%, followed by a GDP growth rate for the next decade at just 1.19%, and then the GDP growth rate of 2001-2010 was just 0.75%, with the projected rate of GDP growth for this current decade expected to stay under 1%, which is has for the first five years of this decade. The aging of Japan's population has increased dramatically since 1989, to which at that point, approximately 12% of the Japanese population was 65 or older, whereas as reported by zerohedge.com in 2015, this percentage had increased to an incredibly high 26.7% of the Japanese population, a more than doubling of just over twenty-six years ago. The population of Japan in 1990 was 123,611,000 and by 2015 had grown to just 127,110.00 a paltry increase of less than 3%, but even more worrisome for Japan, in 2010 their population was 128,057,000 so in the ensuing five years, Japan's population had actually decreased, and is projected to continue to decrease, essentially because of Japan's no or very limited immigration policy, with deaths of an aging population now exceeding births. Finally, in order for GDP to grow, you need both workers and machines, and while the industrialization of Japan is high, its workforce as reported by tradingeconomics.com was at: "…an all time high of 74 percent in June of 1955 and a record low of 58.50 percent in December of 2012," and now rests at 59.30%.
The bottom line is the underlying fundamentals of a given country are going to be reflected in their stock market and those numbers for Japan have been rather bleak, but a fair reflection of the fact that there is little hope, if any, that their GDP will ever again hit around 4% per annum, as it did during the 1980s; as their population is too old, and older people do not produce nor care to produce as much as those that are in their prime years which is further why the labor force participation rate will not come close to approaching 74% ever again, nor do senior citizens consume as much as those that are in their 30s or 40s or 50s, and with net deaths outnumbering net births in Japan there isn't any realistic prospect of internal growth.
The thing about stock markets is that they are international, and money has a tendency to gravitate to where both the bargains are, or more importantly, where the growth will be, and that picture would imply that Japan has seen better days, whereas a country such as India has plenty of room to grow and prosper.