Market observers are increasingly expecting Japanese stocks to rebound in the second half and aim to renew their highs, with interest expected to spread to companies with improving earnings, particularly those linked to AI.
The Japanese stock market has remained in a phase where the Nikkei Average is supported by AI semiconductor-related stocks and holds near its highs, while uncertainty over the Federal Reserve's monetary policy and long-term interest rates remains. The article outlines market participants' view that the index may attempt to renew its highs in the second half.
After the Nikkei Average reached an all-time high in June, gains were constrained by concerns over rising interest rates and supply-demand imbalances, although some observers point to improving earnings at Japanese companies as a supporting factor. Listed companies' net profit for the fiscal year ending March 2027 is expected to rise 14% year on year, reaching a record level for the sixth consecutive year, while bank stocks, which are sensitive to economic conditions, are also viewed as remaining firm.
Market participants' forecasts put the Nikkei Average's expected range at a low of ¥62,050 and a high of ¥76,433, while some say the most bullish forecast reaches ¥84,000. Improvements in corporate earnings through the use of AI and medium- to long-term growth themes are cited as factors that could support share prices in the second half.
Experts have called for the use of generative AI in stock selection in the AI era and said that attention may also turn to companies among regional mid-sized and small businesses.