Japanese shares are on track to post their best annual performance in more than four decades, far outpacing any other major bourse, mostly thanks to a plunge in the value of the yen.
The Nikkei 225 ended the morning session at 16,240.39 on Monday, up 0. 38 percent from Friday but more than 56 percent higher than its 2012 close of 10,395.18.
"This has been a boom year -- it's been a long time since we've seen such a robust performance," said Hikaru Sato, a senior technical analyst at Daiwa Securities.
"The rise beat most investors' expectations and many seem to think it will be another boom next year."
Foreign investors piled into the long-laggard Japanese market in 2013 as the government and central bank unveiled measures aimed at stoke the economy that sent the yen plummeting against the dollar.
The Japanese currency has lost about a fifth of its value against the greenback since the start of the year, providing a much-needed boost to exporters such as Sony and Toyota, whose goods become more competitive overseas. In late morning trade the dollar bought 105.40 yen, well up from the 87 yen level at the end of last year.
With a few hours of trading left, the Nikkei will log its best year since 1972 -- when it nearly doubled -- outpacing a booming Wall Street, which has seen the Dow and S&P 500 power to record highs.
However, it remains a shadow of its former self. The market peaked at almost 39,000 in the last days of 1989 before Japan's asset bubble popped, dealing a huge blow to the economy and sending the index plunging over the next two decades.
And despite the upbeat mood in the market fuelled by a strong pick-up in the US economy and improvements domestically, traders have mixed feelings about what to expect in 2014.
While the most bullish say Prime Minister Shinzo Abe's big-spending policy-blitz aimed at kickstarting the economy is a key confidence driver, there are some who offer a word of caution.
"I expect the Nikkei to rise to the 20,000 yen level next year," said Seiichi Suzuki, market analyst at Tokai Tokyo Securities.
"Abenomics has contributed a lot to the market in terms of risk sentiment."
Major Japanese brokerage house Nomura Securities had more modest forecasts, saying it expected the Nikkei to see-saw through the year before ending at around 18,000.
"We keep our view that Japanese share prices will remain on an upward trend next year, on the back of increase in companies' profits and expectations for Abenomics," it added.
Despite Abe's much-lauded start since sweeping elections a year ago, analysts warn his pro-growth programme -- a mix of big government spending and central bank monetary easing -- is not enough without promised economic reforms.
Legislators have passed a bill that paves the way for an opening up of the electricity sector and Abe is pushing through a bid to strip away protections for the agricultural sector. But it remains to be seen if deeper reforms are in the offing.
And with a sales tax hike planned for April, there are fears that consumer spending will take a dive, and stall a budding recovery.
Tokyo has committed about $54 billion in extra spending to blunt the impact of the tax rise, while there is growing speculation the Bank of Japan will step in with another round of monetary easing to prop up growth.
The central bank launched an unprecedented easing campaign earlier this year to help reverse years of deflation, which in turn helped push down the yen.
But Credit Suisse research analyst Hiromichi Shirakawa said: "if the BoJ opts not to launch more easing... that could end the pattern of a cheaper yen and rising share prices".