Japan Equity Strategy: Market Update Conference: Jun 29, 2026

Research evidence excerpt

Japan Equity Strategy: Market Update Conference: Jun 29, 2026

※ Please also refer to “Japan Equity Strategy: JPM view on impact of ¥370 trillion growth investment in 17

strategic areas and financial growth strategy “(6/25) Jun 29, 2026Equity Strategy (Rie Nishihara/Yong Guo)

Impact of ¥370 Trillion Investment in 17 Strategic Areas and Financial Growth Strategy

◼Strategic investment in growth areas is a long-term theme for boosting the economy, corporate profits, and valuations: On June 24, the government

announced over ¥370 trillion in public-private investment across 17 strategic areas by FY2040. Regardless of the feasibility of achieving the target amount,

we expect that capital allocation to strategic areas will raise the potential growth rate, thereby supporting the economy, corporate profits, and valuations.

Under the government’s most realistic “Growth Strategy Scenario ②” (the middle scenario), the potential growth rate is projected to rise from around 0.5%

currently to 0.9% in 2030 and 1.5% in 2035 (figure). The breakdown of productivity (TFP) gains includes +0.2ppt from AI deployment, and +0.1ppt each

from capital renewal, direct investment in Japan, investment in human resources, and more efficient allocation of production resources. If the potential

growth rate reaches 1% in 2030, JPM forecasts that global investors will increase allocations to Japanese equities, pushing TOPIX P/E above 20x.

◼Fiscal health: Government debt-to-GDP ratio to decline through the mid-2030s, with limited risk of immediate rate spikes: Under the middle

scenario, the government debt-to-GDP ratio is expected to decline through the mid-2030s, then gradually rise. The fiscal balance-to-GDP ratio (including