JAPAN WEEKLY KICKSTART: Time to play offense or defense?

研报英文原文证据摘录

JAPAN WEEKLY KICKSTART: Time to play offense or defense?

Portfolio Strategy Research

17 July 2026 | 8:57PM JST

JAPAN WEEKLY KICKSTART

Time to play offense or defense?

Summary of the week Bruce Kirk, CFA +81(3)4587-9950 | bruce.kirk@gs.com

TOPIX: 3,919.21 (-2.9%) / NK225: 64,141.12 (-6.4%) Goldman Sachs Japan Co., Ltd.

Julius Chan

n Top sectors: Marine Transport, Pulp & Paper +81(3)4587-1789 | julius.chan@gs.com Goldman Sachs Japan Co., Ltd.

n Bottom sectors: Non-Ferrous Metals, Metal Products

In this week’s Japan Weekly Kickstart, we introduce two new screens: 1) a GS

Buy-rated defense screen if TOPIX continues to sell off during the seasonally weak

summer months; and 2) a GS Buy-rated offense screen which is expected to

out-perform during a market rebound. TOPIX and Nikkei have declined -4% and

-11% respectively from their June all-time-highs (versus a -25% correction in

KOSPI). At a TOPIX17 sector level, the sell-off has been concentrated in AI-related

sectors, while defensives have actually been relatively resilient so far.

n Recent 3Q seasonality suggests a correction during quarterly earnings

followed by a year-end recovery: Since CY2013, TOPIX has tended to correct

during the July-August earnings season, before starting to move higher into

year-end (Exhibit 1). The mean 4Q performance of TOPIX since 2013 has been

+5%. However, after years when the 1H performance has been >+15%, TOPIX

tends to flat-line in 3Q before staging a more modest recovery in 4Q.

n 2Q momentum rally duration was in line with previous episodes, but the

subsequent reversal has been sharper: As can be seen in Exhibit 3, the most

recent momentum rally did not last longer than four months, but the correction

has been larger. The AI-to-non-AI valuation premium was at particularly