2026 Market View: Japan Equity

Dec 04, 2025

Maya Funaki, Portfolio Manager, summarises the market in 2025 for the asset class, and gives her thoughts for 2026.

  • Japan equities surged in 2025, with the MSCI Japan Index surpassing 1989 highs, driven by corporate governance reforms, improving fundamentals, reasonable valuations, and consistent EPS growth.
  • Political shifts saw Japan’s first female Prime Minister, who’s pro-growth, pro-investment stance was received positively by the market, though navigating high inflation will be a focus in 2026.
  • Geopolitical tensions with China are viewed as short-lived, counterbalanced by strengthened US ties driving renewal in several industries such as defence and shipbuilding.
  • Global investors are so far underexposed to the world's third largest economy, and we see strong momentum ahead as investor sentiment continues to intensify for Japan.


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