With the Nikkei 225 performing exceptionally well, views are spreading that long-term structural changes are supporting the rise in Japanese share prices. The expansion of growth themes such as AI and energy, along with the increase in share buybacks, is believed to be driving the trend.
Japanese stocks are expected to remain firm through 2026, with the Nikkei 225 reportedly rising from the ¥40,000 range in 2025 to approximately ¥72,000 in 2026. Analysts say this rise reflects improving fundamentals rather than a mere bubble.
The factors behind the rise include the transition from a deflationary to an inflationary economy, an increase in the number of companies reporting record profits after raising prices, and the expansion of growth themes such as AI, energy and biotech. The sharp increase in share buybacks has also been cited as a factor pushing up share prices.
The impact of the Middle East crisis and changes in the policies and actions of President Trump are cited as short-term factors affecting the market, but some believe that structural changes should be the focus over the longer term.