Bullish on Sanae Takaichi’s stimulus policies, Japanese securities firms “en masse” raise Nikkei Index target levels.

Due to optimism that the new ruling party leader Sanae Takaichi may introduce a large-scale economic stimulus plan, several major Japanese securities firms are now competing to raise their year-end target for the Nikkei 225 index.

The latest expression of this optimism is that Japan’s largest securities firms, including Nomura Securities, Daiwa Securities, and SMBC Nikko Securities, have collectively raised their year-end target for the Nikkei 225 index. Meanwhile, Swiss wealth management company Julius Baer has also raised its forecast.

The market reacted quickly and strongly. This Monday, the Nikkei 225 index surged 4.8%, and the TOPIX index gained 3.1%. At the same time, the yen’s exchange rate against the U.S. dollar fell below 150, and its rate against the euro hit a historic low.

Analysts generally believe that the new policies under Sanae Takaichi’s leadership will help boost the economy and corporate earnings growth, which is the fundamental driver behind their adjustment of stock market forecasts.

Major Japanese Securities Firms Are Bullish

The core logic behind several institutions raising their index expectations lies in their optimistic outlook for corporate earnings growth.

Nomura Securities strategists Tomochika Kitaoka and Naoya Fuji wrote in a report on Wednesday that they expect Sanae Takaichi’s policies will bring in a "new economy," creating an environment in which economic growth surpasses interest rates, which is favorable for the stock market.

Based on this, the firm raised its year-end Nikkei index target price from 44,500 to 49,000, and its year-end TOPIX index target from 3,200 to 3,300.

Daiwa Securities strategists Yugo Tsuboi and Shun Otani believe that Sanae Takaichi's appointment as the new LDP president may boost expectations for economic growth, and the firm raised its year-end Nikkei index target from 44,000 to 49,000, also projecting the index may reach 50,000 this year.

SMBC Nikko Securities strategists Hikaru Yasuda and Nobuhiro Takeda raised their year-end Nikkei index target from 45,000 to 47,000 and expect that under Sanae Takaichi's tenure, the energy technology, cybersecurity, and defense sectors will benefit the most.

Julius Baer analyst Louis Chua also believes that thanks to the AI boom, long-term structural reforms in the stock market, and the growth-driven path promoted by "Sanae-nomics," Japanese stocks are "an attractive developed market," and they raised their year-end Nikkei index target from 46,000 to 50,000.

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