Japan’s Winning Formula: Overcoming Headwinds Through 100-Year Companies, Physical AI and Content, Explained by a Nomura Securities Strategist

Nomura Securities identifies 3 areas as winning themes for Japanese equities. The first is a group of 100-year companies with long histories since their founding, the second is physical AI using on-site data, and the third comprises areas centered on content and Japanese brands. These are positioned as medium- to long-term drivers of market growth.

An analysis of TOPIX constituents by year of establishment shows that companies established before the 1910s outperformed TOPIX over the past year, highlighting the resilience and evolution of 100-year companies. Examples include Sumitomo Forestry, Ibiden, Daikin Industries and Nintendo, which are characterized by changes in their core businesses and adaptation to new fields.

Physical AI is attracting attention as a link between AI and manufacturing, with market expansion expected in manufacturing, logistics and healthcare from 2030 onward. The use of the on-site data accumulated by Japanese companies through AI is expected to strengthen competitiveness in manufacturing equipment and robotics.

In the content and Japanese brands segment, the government has set targets for expanding overseas sales of anime and entertainment and increasing exports of Japanese brands. The analysis presents growth in overseas sales as of 2025 and a target of ¥20 trillion in overseas sales by 2033. Strategies for bringing food and agricultural, forestry and fishery products to market are also attracting attention, and the analysis points to room for relative share price appreciation.

Many of the companies concerned are cash-rich, and many have a net cash-to-total assets ratio of 10% or more. This is expected to support efforts to enhance corporate value through capital investment, M&A and shareholder returns.