While megabank stocks have stalled without reaching new highs, regional bank stocks set new highs in August. A Nomura Securities strategist explains that, after a period of back-and-forth trading, Japanese stocks appear likely to trend higher.
Megabank stocks hit recent highs around the end of July 2026, while regional bank stocks set new highs in August. The view is that perceived value and the sense that the stocks had lagged, rather than expectations of rate hikes, were factors behind this.
In the latter half of the 1980s, megabank stocks also hit highs in early spring and then moved back and forth during a Bank of Japan rate-hike cycle. Against this backdrop, TOPIX and the Nikkei Average incorporated gains in regional banks and went on to form highs over the following 2.5 years.
Among the factor returns for bank stocks, low PBR, low PER and a high individual ownership ratio are cited as positive factors, with the effectiveness of low PBRs said to have been particularly pronounced in recent years. When regional banks set new highs, overall market indices also tended to move temporarily from sideways trading to the upside.
As a screen for the banking sector, the view has been expressed that attention should be paid to groups of regional bank stocks meeting the criteria of low market capitalization, value characteristics, low foreign ownership and high individual ownership. Nomura Securities uses data as of 19 August 2026 as its source.