27 Oct 2025
Three powerful forces are converging 👇
1️⃣ A predictable, pro-market policy mix
PM Sanae Takaichi is doubling down on an Abenomics 2.0 formula — fiscal support, pro-growth industrial policy, and a still-dovish Bank of Japan.
Add the Tokyo Stock Exchange’s campaign for better capital efficiency (P/B < 1 firms pushed to fix balance sheets, unwind cross-holdings, boost ROE) — and you get rising multiples, buybacks, and dividends.
2️⃣ Earnings turbocharged by a weak yen
A softer yen means every dollar of global revenue converts into fatter yen profits.
Exporters and tech suppliers — from semiconductors to automation — are posting margin resilience and beating guidance.
Investors see that leverage extending into the AI, EV, and industrial digitization cycles ahead.
3️⃣ Foreign money chasing reform and value
Japanese stocks still trade at discounts to U.S. peers but with cleaner balance sheets and credible governance reforms.
Global allocators diversifying beyond U.S. mega-caps are pouring in — absorbing dips, fueling breakouts.
🌏 Geopolitics that add, not subtract
With U.S.–Japan trade cooperation and easing U.S.–China tensions, Japan benefits from de-risking, not decoupling.
New fabs, packaging, and chip equipment demand are landing in Japan — exactly where value accrues.
⚠️ But watch the pressure points
A sharp yen rebound could hit exporters.
Persistent inflation could force the BOJ’s hand.
A slowdown in U.S. tech or China’s imports would hit Japan’s growth engines.
💡 Bottom line:
Nikkei 50,000 isn’t just a number — it’s the market voting for Japan’s mix of easy money, corporate reform, and strategic positioning in the global AI and industrial build-out.
The story holds as long as the yen stays weak, reforms keep unlocking ROE, and global capex keeps humming.
Source: EndGame Macro
