Japan’s equity markets appear poised for continued momentum, with analysts forecasting fresh highs following the appointment of Sanae Takaichi as the country’s new Prime Minister. Investors are optimistic that her government will pursue bold fiscal policies to stimulate growth, according to the head of one of the world’s largest independent financial advisory firms.
Takaichi’s landmark victory as Japan’s first female premier has energised investors, fuelling expectations that her administration will prioritise industrial competitiveness, technological innovation, and global economic leadership.
Market sentiment suggests confidence that fiscal stimulus will remain central to Japan’s growth strategy, encouraging renewed capital inflows into domestic equities.
Nigel Green, CEO of deVere Group, believes Tokyo will sustain a pro-growth direction even as other major economies begin to cool.
“Markets see in Takaichi a leader who intends to keep Japan’s economy moving forward through targeted public investment,” he comments.
“There are indications that fiscal expansion will remain at the heart of policy, particularly in sectors viewed as vital to national resilience – defence, technology, energy, and cybersecurity.”
This optimism has already been reflected in trading activity, with futures indicating further strength for both the Nikkei 225 and Topix indices as investors bet on continued fiscal support.
Japan has been one of the standout stock markets of 2025, driven by structural reforms, stronger corporate governance, and growing international participation.
“Global investors have been steadily increasing their exposure to Japan because the story has shifted from deflation to expansion,” Nigel Green notes.
“Now, the country’s political stability and renewed fiscal ambition are giving that rally fresh impetus.
“Takaichi’s proposed alignment of government spending with structural reform is viewed by markets as a potential turning point for Japan’s economic model. Her coalition has pledged to streamline bureaucracy and direct spending toward long-term strategic goals.”
Nigel Green continues: “Japan’s growth model is evolving from emergency stimulus to purposeful investment.
“It matters because it underpins confidence that fiscal expansion can drive productivity, not just liquidity. Investors are positioning early for what could be a powerful multi-year growth phase.”
However, Green also cautions that the market’s optimism should be tempered by fiscal realities. The yen remains near historic lows, and bond traders are anticipating higher issuance as public spending ramps up.
“Currency and bond markets are sending a reminder that policy credibility remains essential,” he explains.
“If spending is not balanced with fiscal discipline, Japan could see inflationary pressures intensify and borrowing costs rise. For now, however, equity investors are more focused on the growth potential than the fiscal arithmetic.”
Japan’s proactive economic stance sets it apart from much of Europe and North America, where governments face tighter budgets, elevated debt costs, and political divisions that constrain stimulus measures.
Takaichi’s assertive fiscal agenda could therefore enhance Japan’s standing as a prime destination for international investors seeking both diversification and a clear policy outlook.
Confidence is also strengthening across Japan’s corporate landscape, where shareholder-friendly reforms, rising dividends, and export gains amplified by the weak yen continue to attract foreign participation. Analysts predict sustained inflows into Japanese equities if the new government stays on its expansionary path.
Nigel Green concludes: “As Takaichi’s administration takes shape, markets are effectively voting with their capital, and they’re voting for growth.”
