Japan Equity Strategy: 2H 2026 Outlook Earnings-driven stock rally to continue: Investment strategy with rising interest rates vs AI growth

Research evidence excerpt

Japan Equity Strategy: 2H 2026 Outlook Earnings-driven stock rally to continue: Investment strategy with rising interest rates vs AI growth

J P M O R G A N Global Markets Strategy

30 June 2026

Japan Equity Strategy: 2H 2026

Outlook

Earnings-driven stock rally to continue: Investment

strategy with rising interest rates vs AI growth

This report on the outlook for Japanese equities in 2H 2026 is a collaboration Equity Strategy

ACbetween our equity strategy and equity research teams. We expect the uptrend in Rie Nishihara

Japanese equities to continue in 2H and have raised our year-end targets to 4,400 (81-3) 6736-8629

for TOPIX and 75,000 for the Nikkei 225. While the pace of share price gains in rie.nishihara@jpmorgan.com

1H was rapid, the rally was driven by earnings centered on AI semiconductor JPMorgan Securities Japan Co., Ltd.

names, and overheating in P/E multiples receded. The government's two growth Yong Guo, CFA

strategies of growth investments in strategic sectors and encouraging individuals (81-3) 6736-8623

yong.guo@jpmorgan.com

to shift their assets into equities and government bonds are likely to accelerate JPMorgan Securities Japan Co., Ltd.

growth in corporate profits, increase personal disposable income, and stabilize the

Mansi Das

JGB market, helping to mitigate the risks of rising interest rates and yen (91) 2261 573343

depreciation. Since 2025, the Japanese equity market has not experienced mansi.das@jpmchase.com

sustained declines even after major shocks, and we believe that ongoing structural J.P. Morgan India Private Limited

changes, such as corporate reforms and capital flows, continue to provide Mislav Matejka, CFA

significant upside potential over the medium term. In 2H, the key investment focus (44-20) 7134-9741