Japan Equity Strategy

Latest edition · September 28, 2026

JPM Japan Equity Strategy

Japanese corporate reforms in 2026 are deepening as companies transition from externally driven shareholder payouts to internally driven long-term ROIC and ROE enhancements via growth capex and restructuring. J.P. Morgan expects TOPIX ROE to reach 10–11% in FY26–27 and 12% by FY28, underpinned by margin expansion and index restructuring.

Japanese corporate reforms are entering their third chapter in 2026, transitioning from external discipline (activism and TSE/FSA mandates on surplus capital reduction) to company-led maximization of long-term corporate value. Although global investors expressed concern over recent revisions to the Corporate Governance Code and METI Takeover Guidelines, J.P. Morgan argues these policies encourage productive resource allocation rather than curbing shareholder returns. Supported by a positive interest rate environment, expanding operating cash flows, strategic shareholding unwinding, and TOPIX constituent consolidation from ~1,700 to ~900, TOPIX ROE is projected to accelerate toward 10–11% in FY26–27 and reach 12% by FY28. Companies demonstrating superior 'growth investment capabilities'—balancing capex and total payout ratios while boosting ROIC—are expected to outperform.

Key takeaways from the latest edition

• 1.Japanese corporate reform is entering a new phase where companies lead value creation through growth investment, M&A, and restructuring rather than relying on external discipline or activism.
• 2.Revisions to the Corporate Governance Code and Takeover Guidelines aim to foster long-term corporate value maximization rather than a retreat from shareholder returns.
• 3.The share price impact of activist campaigns has faded and shortened in duration, marking a shift to corporate-driven value enhancement.

What this series covers

• Summary
• Corporate reform entering new phase of focus on long-term corporate value
• Corporate reform entering a new stage in 2026
• Global investors concerned about a slowdown in reforms
• Shift in emphasis not from shareholders to companies, but to long-term corporate value
• Increase in ROIC and greater returns on expanded investment
• ROE rising to 10-11% at a faster pace
• Growth investment set to expand
• ROE contribution from growth investment
• Drop in activist investors' impact on share prices
• TOPIX reform “Phase 2”, reduce number of listed companies from 1,700 to around 900
• Companies with growth investment capabilities
• 2026 corporate reform: Six facts
• (1) Corporate ROE and margins
• (2) ROE and ROE-P/B by company and sector
• (3) Cash generation and capital allocation
• (4) Corporate business reorganization, M&A, and strategic shareholdings
• (5) Activist involvement
• (6) Shareholder returns

Edition archive

• JPM Japan Equity Strategy

  September 28, 2026

• JPM Japan Equity Strategy

  September 8, 2026

• JPM Japan Equity Strategy

  August 4, 2026