This analyst predicted the Nikkei would cross 40,000. Here's where he thinks it'll go next

Japan's Nikkei 225 smashed through the 40,000 level on Monday, soaring past another milestone to a new record high — but it did not surprise Japan expert Jesper Koll who expects another 37% upside for the benchmark stock index.

"In my view, it is perfectly reasonable to expect a rise in the Nikkei to 55,000 by end-2025. I [know I sound] more like a bubble-era stockbroker than a gentleman, but I cannot hide my excitement," Koll, expert director at financial services firm Monex Group, told CNBC on Monday.

Koll was referring to the asset and equity bubble Japan saw in the late 80s, which resulted in the Nikkei hitting its 1989 highs.

But the euphoria did not last. In 1990, the bubble burst and Japan fell into a period of economic stagnation, known today as its "lost decades." In less than a year, the Nikkei lost half its value.

For the past two weeks, Japan's benchmark stock index has been testing uncharted territory.

On Feb. 22, the index surpassed its previous all-time high of 38,915.87, set on Dec. 29, 1989 — breaching a record that was held for 34 years.

Following that, the index climbed past the 39,000 mark, and eventually crossed the 40,000 level on Monday.

In July last year, Koll told CNBC's "Street Signs Asia" he expected the Nikkei to hit 40,000 "over the next 12 months."

When asked what drives his optimism, Koll told CNBC on Monday that it was in part due to Japan's ability to be a "capital value-creating superpower."

He said his optimism does not stem from the Bank of Japan's monetary actions, nor a boost from the so-called "new capitalism" initiative announced by Prime Minister Fumio Kishida in June.

Instead, his optimism comes from Japan's private sector.

"Japan's strength comes bottom-up from the private sector," Koll