Japan Equities 2Q26 | Rejuvenation
Following Takaichi’s supermajority victory, investor attention will pivot towards pro-growth, reflationary policies through calibrated fiscal expansion. Corporate reform should support further r...
Chief Investment Office - Hong Kong version20 Mar 2026
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Transitioning to “Takaichi-nomics”

We see constructive implications for Japanese equities as a more assertive and coordinated economic agenda is expected under the Takaichi administration. With a strong legislative mandate, government ministries now possess the political capital to execute reform with greater speed and cohesion, anchored on a “responsible and proactive” fiscal stance.

Targeted fiscal deployment into strategic sectors should reinforce business confidence, catalyse private capex, and strengthen the investment climate. In this context, the transition from “Abenomics” and “Kishida-nomics” toward “Takaichi-nomics” could consolidate the narrative of a structurally transformed “New Japan” – characterised by sustainable growth, firmer nominal GDP momentum, and the eventual normalisation of the structurally undervalued yen.

Consensus forecasts for both GDP and corporate earnings have been revised upward following the LDP’s landslide win. Foreign investors, net sellers in the prior few months, have returned meaningfully – a signal that policy clarity and growth visibility are improving sentiment.

Reform Momentum and Equity Supply Tightening

Structural reforms initiated in prior years are now manifesting in capital discipline and shareholder returns.

  • Corporate share buybacks reached record highs in 2025.
  • Divestments of non-core assets have accelerated.
  • M&A and private equity deal volumes also hit cyclical highs.
  • Companies are paying higher dividends.

This combination of improving shareholder value and governance reform has effectively tightened equity supply while improving return-on-equity metrics. More importantly, the resilience of corporate earnings and the attainment of record equity levels suggest that structural reforms implemented over the past two years are already translating into tangible corporate outcomes. We expect this momentum to persist into 2026, further underpinning market performance.


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