Tokyo Reborn: Japan's Return to the Global Market Map
After decades of stagnation, the Japanese stock market is reaching historic highs. The Nikkei 225 index has surged by 25% since the beginning of the year, driven by the appointment of Sanae Takaichi, the first woman to lead the government, and the prospect of an "Abenomics 2.0." Behind this euphoria lies a deeper movement: an economy undergoing reform and a market breaking free from its old challenges.
The Takaichi Effect: Stability and Recovery
Japan hasn't experienced such a resurgence of optimism in a long time. The rise to power in October 2025 of Sanae Takaichi, a rising figure in the Liberal Democratic Party (LDP), has rekindled memories of the Abe era's economic strategies. Takaichi, who was formerly the Minister of Internal Affairs and a staunch advocate of Keynesian stimulus, has embraced the « Abenomics 2.0 » approach: fiscal stimulus, accommodative monetary policy, and structural reforms. The effect has been immediate. The Nikkei 225 index has surged 25% since January, approaching the 50,000-point mark, supported by a weak yen and an economic program deemed business-friendly. « The combination of political stability and a pro-growth agenda has restored market confidence, » summarizes Lucas Brauner, Japan economist at DWS Investment GmbH.
Yet the rise in Japanese markets isn't solely based on political factors. Structural forces are supporting this trend: the return of foreign investors attracted by still moderate valuations; corporate governance reforms mandated by the Tokyo Stock Exchange, which encourage companies to make better use of their capital; and a near-record wave of share buybacks. All these are signals of a normalization in the Japanese economy, long hindered by deflation and risk aversion.
Observers also see this as the result of a generational shift within Japanese companies: new leadership in major technology and industrial groups is adopting management practices more focused on profitability and transparency. « Japanese companies are no longer just hoarding cash; they are looking to make it grow, » notes a market strategist in Tokyo.
A Broader Rebirth Than It Seems
Beyond the Nikkei, the entire structure of the Japanese market is evolving. Industrial and financial stocks—long overshadowed by tech giants—are now contributing to the rise, driven by increasing yields and the prospect of enhanced fiscal support. The broader Topix index is also advancing, boosted by the strong performance of the electronics, banking, and robotics sectors.
The intervention of the Tokyo Stock Exchange, which has urged listed companies to improve capital efficiency by 2025, acts as a wake-up call. Companies with valuation ratios below their book value have been encouraged to rethink their capital structure—a significant cultural shift in a country marked by financial prudence for the past thirty years.
On the monetary front, the Bank of Japan (BoJ) remains cautious. After ending its negative interest rate policy, it is expected to hold off on further increases to avoid jeopardizing the recovery. “Additional hikes are likely, but they will probably be delayed by the political transition phase and the planned stimulus measures,” predicts Lucas Brauner. This delay provides markets with a breather: time to absorb the fiscal stimulus and consolidate nominal growth.
Japan: Investable Again
For international investors, Japan is once again becoming a land of opportunities. A weak yen, political stability, and the prospects of reforms create a favorable environment for the performance of Japanese assets. Major fund managers are adjusting their allocations: Japanese equity funds are experiencing positive net inflows after several years of disinterest.
The rise of the Nikkei also reflects a renewed confidence. Long marginalized by Western investors, the Japanese market now enjoys a more modern, transparent, and predictable image. Share buybacks and rising dividends are aligning Japanese practices more closely with Anglo-Saxon standards.
However, some experts point out that much of this optimism is already priced in. With valuations becoming stretched, the future will depend on the Takaichi government's ability to turn reform promises into concrete measures: opening the labor market, digitization, and boosting domestic consumption.
Nonetheless, the momentum has begun. After two decades of stagnation, Japan seems finally to be reconnecting with growth and attractiveness. With monetary discipline, governance reforms, and industrial ambition, the archipelago is reclaiming its position on the global investment map. And perhaps the financial 21st century will have its own Japanese moment?
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
