Japanese Equities

UBS maintains an attractive view on Japanese equities, expecting market leadership to expand from AI-related technology stocks into cyclical sectors such as financials and machinery. This broadening is supported by strong AI capex, Bank of Japan policy normalization, and an recovering global manufacturing cycle.

Key Takeaways

• 1.Maintain Attractive view on Japanese equities as market leadership broadens beyond AI to include cyclical sectors.
• 2.AI value chain remains strong due to hyperscaler capex, supporting Japan's semiconductor and equipment suppliers.
• 3.BoJ policy normalization and manufacturing cycle recovery provide catalysts for financial and machinery sectors.

Table of Contents

• From AI-led rally to broad-based upside
• Our view
• AI remains the core earnings engine
• Higher-for-longer AI capex supports Japan's tech upside
• Next phase: Cyclical catchup opportunity
• Financials: Back in focus due to BoJ normalization and loan growth
• Manufacturing cycle recovery supports cyclicals
• Structural rerating story intact
• Risks to our view
• Valuations
• Appendix

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