Japan’s Stock Forecast Raised to 60,000 Yen on Fiscal Stability, June 14

Nomura Securities raised its year-end 2026 forecast for Japan’s Nikkei 225 stock index to 60,000 yen, up from prior guidance. The upgrade reflects the ruling Liberal Democratic Party’s election victory in February and stronger-than-expected corporate earnings. The brokerage now expects the TOPIX index to reach 4,000 by year-end 2026, with earnings growth accelerating as fiscal stimulus supports the economy.

Why Japan’s Stock Outlook Improved

The Liberal Democratic Party’s decisive election win in February removed political uncertainty and boosted investor confidence. Nomura revised its earnings forecasts upward after reviewing third-quarter 2025 results, which showed positive restructuring and order growth across electronics and other sectors. The brokerage now expects TOPIX earnings per share to grow 7.4% in fiscal 2025, 15.2% in fiscal 2026, and 11.4% in fiscal 2027, each slightly higher than prior estimates.

Government Spending and Interest Rate Dynamics

Japan’s main political parties have backed fiscal measures to combat inflation, creating an environment where nominal economic growth outpaces long-term interest rates. This dynamic supports stock valuations and reduces pressure on corporate borrowing costs. Nomura strategists noted that rising interest rates, while increasing government debt servicing costs, have not derailed the market’s positive momentum. The brokerage expects the price-to-earnings ratio to gradually fall from 18 times to 15-16 times as earnings growth accelerates.

Sector Shifts and Technology Opportunities

Nomura added information technology to its list of favored sectors, citing valuation opportunities in software and AI-related businesses after recent market weakness. The brokerage removed real estate and trading companies from its focus list after their post-election rally reduced value. Japanese IT firms benefit from stable enterprise demand for data infrastructure and security services, which Nomura expects to remain resilient even amid global AI competition.

Upside and Downside Scenarios

Nomura’s main forecast assumes the Nikkei 225 reaches 63,000 yen by end-2027 and 66,000 yen by end-2028. An upside scenario envisions 72,000 yen by end-2027 if Japan’s potential growth rate improves and corporate return on equity rises toward U.S. levels. A downside scenario exists if business restructuring stalls and ROE remains below 11 percent. The brokerage expects annual returns of roughly 7 percent including dividends under its base case.

Final Thoughts

With Nomura’s 60,000 yen target and fiscal policy support in place, Japan’s stock market has shifted from a liquidity-driven rally to an earnings-driven one. Investors should monitor corporate profit growth and government spending levels to validate the forecast.

FAQs

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.