A long-term estimate released by Nomura Fiduciary Research & Consulting indicates that the Nikkei 225 could reach approximately ¥110,448 in FY2035 under the standard scenario and approximately ¥146,142 under the high-growth scenario.
The long-term estimate for Japanese equities was based on 3 scenarios. The Nikkei 225 was estimated to reach ¥110,448 in FY2035 under the standard scenario, ¥146,142 under the high-growth scenario and ¥91,554 under the cautious scenario. The estimates were calculated by combining assumptions for EPS growth and PER, while the report avoided specifying assumptions for future exchange rates.
The high-growth scenario assumes EPS growth of 9.5% and a PER of 18x. The standard scenario assumes EPS growth of 6.8% and a PER of 17x, while the cautious scenario assumes EPS growth of 6.1% and a PER of 15x. The stock price levels for FY2035 under each scenario were derived using real GDP growth rates that include overseas growth and reflect overseas factors.
The overseas sales ratio is assumed to remain at approximately 41%, while the effect of share buybacks and the inflation rate are each estimated at 2.0%. These factors are combined to calculate EPS growth and are treated as factors that raise the long-term PER from its historical average.
The long-term estimates use the distribution of real GDP growth scenarios based on the Cabinet Office's medium- to long-term estimates, evaluating stock price levels through combinations of EPS growth and PER. The high-growth scenario is supported by an assumption that average annual EPS growth from a 2023 base year will be 9.5%.
The report expressed the view that growing overseas earnings and stronger investment appetite for Japanese equities, supported by rising demand for AI semiconductors, will bolster Japan's long-term growth potential.