Japan Equity Strategy: Tested, Not Derailed

Morgan Stanley maintains a bullish outlook on Japanese equities, setting a TOPIX target of 4,300 for June 2027. The thesis is built on long-term structural reforms, the AI investment cycle, and corporate governance progress.

Key Takeaways

• 1.Memflation is a partial relief but not a solution.
• 2.FX intervention risk may trigger a bear trade, but it will be short-lived.
• 3.Bullish stance on Japanese equities remains based on long-term structural drivers.

Table of Contents

• Key Takeaways
• 4 reasons we are bullish on Japan equities
• The Summit Lies Ahead: MS TOPIX target (end-Jun 2027) 4,300pt
• Top-down sector preferences: favor upstream B2B sectors
• Expectation of a long Takaichi administration / faster growth strategy incl. national security
• BOJ monetary policy
• Japan Focus List
• Progress in corporate governance reform
• Rising household investment in Japanese equities via NISA

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