JAPAN FIRST TO MARKET

Research evidence excerpt

JAPAN FIRST TO MARKET

Asia Pacific Equity Research

Japan First to Market 27 July 2026

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Japan Equity Strategy (Rie Nishihara)

GPIF investment under Sanaenomics: Market impact from possible investment strategy shift

Japan's Cabinet approved the FY2026 Basic Policy (the annual economic and fiscal policy blueprint) on July 21. The Takaichi

administration reaffirmed its commitment to a responsible, proactive fiscal policy to promote growth investment through public-

private collaboration, and to raise Japan's growth potential and boost employment, income, and corporate earnings to achieve

a virtuous cycle of growing tax revenues without raising tax rates. Such economic stimulus measures would be positive for

corporate earnings and the stock market, but we believe it will be important to implement them in a way that maintains fiscal

soundness over the medium term. No details or funding sources were disclosed regarding the consumption tax cut (policy is to

be decided by the National Council on Social Security in early August) or the increase in defense spending, so we think upward

pressure on interest rates and downward pressure on the yen may persist. Against this backdrop, Prime Minister Sanae

Takaichi, Finance Minister Satsuki Katayama, and Health, Labour and Welfare Minister Kenichiro Ueno all stated ahead of the

Cabinet decision that they would support the Government Pension Investment Fund's (GPIF) investment in domestic assets.

The media reported substantial buying in a JGB auction by a party believed to be the GPIF, and the upward momentum of long-

term interest rates eased for a time. Upward pressure on interest rates and downward pressure on the yen are still smoldering

due to the Middle East conflict.