4,500 points! Goldman Sachs raises its target price for the Japanese stock market, optimistic that a weaker yen will boost corporate profits.

``` Goldman Sachs Raises TOPIX Target, Bets Yen’s Continued Depreciation Will Provide Ongoing Support for Japanese Corporate Earnings, Despite Short-Term Volatility Risks. In a July 24 report, Goldman Sachs announced an increase in its 12-month TOPIX target from 4,400 to 4,500, which implies about 12% upside from last Friday’s closing level of 4,011.31. At the same time, the bank raised its 3-month and 6-month targets to 4,200 and 4,300, respectively. The core logic behind the adjustment is its currency outlook—Goldman’s FX team expects USD/JPY to reach 165 over the next 12 months, with the yen’s sustained weakness providing a direct boost to the profitability of exporters and multinational companies. Goldman forecasts TOPIX earnings per share will grow 13% to 228 yen in FY2026, with subsequent growth of 11% and 9% over the next two years. Although uncertainty around global AI prospects and geopolitical tensions may cause short-term market volatility, Goldman notes that TOPIX has only pulled back about 2% from its June historical high, demonstrating notable relative resilience. FX Outlook Drives Target Hike The upward revision in target price is mainly driven by Goldman’s latest view on yen movements. The bank’s FX team now expects USD/JPY to reach 162 in three months, 163 in six months, and 165 in 12 months. Annual FX assumptions were also adjusted accordingly: 162 for FY2026, 160 for FY2027, and 155 for FY2028. The yen's ongoing depreciation provides a direct profit tailwind for Japanese exporters and multinational groups. Based on these currency trajectories, Goldman forecasts TOPIX EPS to grow 13% to 228 yen in FY2026, up 11% in FY2027, and up 9% in FY2028, demonstrating a clear positive earnings revision logic. Goldman acknowledges that uncertainties regarding future global AI demand and geopolitical frictions could weigh on market sentiment in the short term. However, the bank notes that TOPIX has only pulled back about 2% from the all-time high set in June, outperforming other Asia-Pacific markets. Current valuations have stabilized at a forward PE of 16-17 times, and Goldman believes there is still ample room for long-term expansion. This valuation level provides fundamental support for the target price increase and is a key reason for Goldman’s continued mid-term optimism. In addition, capital flows in Japanese equities are showing clear geographic divergence. June data show that North American investors—mainly from the U.S.—became net buyers of Japanese stocks, with a total of 600 billion yen, while European investors—who traditionally prefer value strategies—were net sellers of 1.5 trillion yen over the same period, moving in the opposite direction. Exchange data from mid-July further show foreign investors net sold 286 billion yen in the cash equity market, while domestic retail investors and local financial institutions were net buyers of 407 billion yen and 64 billion yen, respectively, effectively absorbing the foreign sell-off and demonstrating domestic capital support for the market. Risk Warning and Disclaimer The market involves risk, investment requires caution. This article does not constitute personal investment advice, nor does it take into account any specific investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment based on this article is at your own risk. ```