On the Rise – Reforms, Technology, and Attractive Valuations

The Japanese stock market remains one of the most attractive regions for long-term investors in 2026. After decades of weak growth, the corporate landscape has undergone a lasting transformation. Companies are focusing more on profitability, returns on capital, and shareholder-friendliness. Share buybacks, dividend increases, and more efficient capital allocation are now an integral part of many corporate strategies.

This trend is supported by Japan’s continued moderate inflation. After years of deflation, companies are increasingly able to pass price increases on to their customers. At the same time, wages are rising, which supports private consumption and stimulates the domestic economy.

Another key driver remains the geopolitical realignment of the global economy. Many international companies are diversifying their supply chains and seeking alternatives to China. Japan benefits from this trend as a technologically advanced and politically stable location. Japanese companies hold leading global market positions, particularly in the fields of semiconductors, automation, robotics, and industrial precision technology.

Valuations also continue to appear attractive. While many U.S. technology stocks are trading at high valuations, numerous high-quality Japanese companies continue to trade at a discount to their international competitors despite strong balance sheets and solid growth prospects.

Risks include, above all, a sharper appreciation of the yen, a global slowdown in growth, or a more significant tightening of monetary policy by the Bank of Japan. Overall, however, we believe that the structural opportunities continue to outweigh the risks.
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Expected GDP 2026: 0.60%
Expected inflation 2026: 2.10%
Japanese Policy Rate: 0.64%

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Mimi Haas, Lic. rer.pol. HSG, M.A. in Banking and Finance HSG, Partner

_{Sources: OECD, Bank of Japan, and IMF
As of: June 22, 2026}