Japanese equities have experienced significant growth, underpinned by wide-ranging government reforms, targeted investment in advanced sectors such as artificial intelligence and semiconductors, and a renewed emphasis on capital efficiency and shareholder returns. Supported by record profits and resilient domestic consumption, the upward trajectory in company earnings is likely to persist through 2026. This report examines the key drivers behind the momentum in Japan’s stock market and outlines the factors drawing increased investor interest.

 

Key takeaways

  • Japanese equities are surging, driven by Prime Minister Sanae Takaichi’s pro-growth policies, aggressive fiscal spending, and reforms targeting strategic sectors like AI, semiconductors, and defence.
  • Corporate governance reforms are shifting companies from cash hoarding to capital efficiency, with increased focus on shareholder returns, transparency, and operational restructuring.
  • Record profits, robust AI demand, and resilient domestic consumption are fuelling strong earnings momentum, positioning Japanese equities for continued growth into 2026.

'

The PERSPECTIVES Viewpoint is currently available and client-ready for the following regions: Germany, Americas, Europe, Middle East, Africa and Asia Pacific

PDF

Language:

Related special reports

Financial market chart on smartphone with trading graphs in background

PERSPECTIVES Viewpoint Equity

Higher for longer: Implications for the stock market

In this Viewpoint Equity, we revisit the relationship between bond yields and equity markets as government bond yields reach multi-year highs.

Oct. 15, 2026

Federal Reserve building facade with eagle sculpture.

PERSPECTIVES Viewpoint FX

Central banks back in the spotlight

After several weeks during which geopolitical developments were the dominant driver of currency markets, central bank policy has once again emerged as a decisive influence on exchange rate movements. We assess the likely direction of major currencies and the key factors expected to shape their performance.

Oct. 02, 2026

supply disruption powers up prices desktop

PERSPECTIVES Viewpoint Commodities

Supply disruption powers up prices

Explore the latest commodities outlook as supply disruptions, energy market volatility, central bank gold demand and growing copper needs from electrification and AI influence commodity prices.

Oct. 01, 2026

Skyline against office building

PERSPECTIVES Viewpoint Fixed Income

Credit spreads’ quiet resilience

Corporate bond yields have also moved higher, largely because of the rise in underlying benchmark yields. Spreads to these benchmarks, however, have remained broadly resilient. We explore the implications in this publication.

Sep. 29, 2026

the yield rise goes global

PERSPECTIVES Viewpoint Fixed Income

The yield rise goes global

Bond yields are rising globally. Learn what is driving the market repricing and where opportunities may emerge for fixed-income investors.

Sep. 18, 2026

Japanese yen banknotes beside a financial market publication

PERSPECTIVES Viewpoint FX

JPY rallies after interventions

After the JPY had depreciated to a 40-year low against the USD, the Bank of Japan has been pushing back against further weakness via interventions since last Thursday, partly in coordination with the US Federal Reserve. read more

Aug. 03, 2026

See more

In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S.

The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

This web page is not an offer to buy a security or enter into any transaction. The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consider the sales restrictions relating to the products or services in question for further information. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment.