Japan’s equity outlook for the end of 2026 was revised upward to a Nikkei 225 target of ¥60,000. Earnings forecasts were raised to reflect the general election result and company earnings, bringing forward the expected timing for TOPIX to reach 4,000 and the Nikkei 225 to reach ¥60,000 to the end of 2026.
An upward revision to EPS forecasts for FY2025–FY2027 was indicated based on company earnings and the macroeconomic environment following the election. After the general election on 8 February, share prices rose, but periods of continued selling pressure from pension funds and outflows from investment trusts are also expected. Over the longer term, the unwinding of overseas investors’ underweight positions in Japanese equities is viewed as a potential contributor to further gains in share prices.
TOPIX EPS growth was revised slightly upward to +7.4% for FY2025, +15.2% for FY2026 and +11.4% for FY2027. Lower tariff impacts and volume and price effects are expected to contribute to earnings. The Nikkei 225’s main scenario assumes that it will reach ¥60,000 by the end of 2026.
Under the main scenario for domestic equity indices, TOPIX is forecast at 3,850 → 4,000 → 4,200 → 4,400, while the Nikkei 225 is forecast at 57,750 → 60,000 → 63,000 → 66,000. The upside scenario assumes a Nikkei range of up to ¥67,500–¥75,000, while the downside scenario assumes a level of around ¥52,500.
By sector, real estate and trading companies were excluded, while information and communications was added as a sector of interest. Concerns about AI substitution in the SaaS field were not considered to be underestimated, while demand for security and infrastructure was viewed as firm. ERP is expected to remain as a data platform.
The upside scenario also assumes a Nikkei 225 level of ¥72,000 at the end of 2027, while significant improvements in ROE and changes in the potential growth rate are key assumptions. Over the longer term, the PER is considered likely to converge from just over 18x currently to around 15x–16x.