A Nomura Securities strategist raised the Nikkei 225 outlook to ¥70,000 at the end of 2026, citing the expected expansion in EPS. The strategist forecasts the market's future trajectory against the backdrop of an upward revision to the TOPIX EPS outlook and firm supply-demand conditions.
Following the upward revision to the TOPIX EPS outlook dated 10 August 2026, the outlook for Japanese equity indices was raised. Under the main scenario, the Nikkei 225 is forecast at ¥70,000 at the end of 2026, ¥73,000 at the end of 2027 and ¥76,000 at the end of 2028. EPS growth is assumed to be the main driver of the rising stock market trend.
The outlook for domestic equity indices is based on a TOPIX level of 4,400 and a Nikkei 225 level of ¥70,000 as of December 2026. The report indicates that the Nikkei 225 could rise to around ¥80,000 in the upside scenario and fall to around ¥55,000 in the downside scenario. PERs are assumed to be around 17x for TOPIX and around 23x for the Nikkei 225, with valuation levels above the ranges assumed.
On the supply-demand front, share buyback announcements have increased, and the cumulative amount since the start of the year has exceeded ¥20 trillion. The report expects announcements of share buybacks totaling approximately ¥20 trillion to ¥22 trillion annually to continue, and says that buying appetite among individual investors and overseas fund inflows will support supply-demand conditions for Japanese equities.
Risk factors include an upside scenario if trends in AI and semiconductors, a virtuous cycle of wages and consumption, and ROE improvement progress, and a downside scenario if downside factors such as a renewed escalation of tensions involving Iran or a loss of momentum in the growth outlook emerge. Medium- to long-term expected returns, including dividends, are estimated at approximately 7% to 8%.