Japanese equities investment strategy (June)

Research evidence excerpt

Japanese equities investment strategy (June)

ast for FY26 to 225.2 (+10.0% y-y, over the FY25 makoto.furukawa@nomura.com

result of a 14.9% y-y increase to 204.8), and raised our FY27 forecast to 257.1 (+14.2%) and +81 3 6703 1174

our FY28 forecast to 274.6 (+6.8%). Our main scenario has the TOPIX at 4,200 at end-2026, Shin Nishioka - NSC

4,400 at end-2027, and 4,600 at end-2028, and the Nikkei 225 at 68,000 at end-2026, 70,000 shin.nishioka@nomura.com

at end-2027, and 72,500 at end-2028. We expect the market to seesaw in the near term in view +81 3 6703 3948

of uncertainty about whether the pace of improvement in earnings at AI/semiconductor Shunta Tachinaka, CFA - NSC

companies will be sustainable, profit-taking pressure from domestic investors, and the seasonal shunta.tachinaka@nomura.com

tendency of share buyback announcements to die down starting in June. Nevertheless, we +81 3 6703 1212

expect equity indices to climb to new highs as cost increases run their course, Japanese

consumers see a recovery in their purchasing power, and companies (particularly B2B) start

seeing price hikes feed through into their earnings. In our upside scenario, we see the TOPIX

at 5,100 and the Nikkei 225 at 80,000 by end-2027, rising on productivity improvements by

means of AI/DX, progress with industry realignment and corporate restructuring efforts, and a

genuine recovery in wages and consumer spending. In our downside scenario, we see the

TOPIX at 3,650 and the Nikkei 225 at 55,000 by end-2027.

Key sectors/themes: Adding real estate/fine chemicals to list of highlighted sectors

We continue to highlight the electric appliances and machinery sectors, but now add real estate

(where valuations have become more attractive since May) and fine chemicals (which are