In early 2026, Japanese stocks surged to global leadership in growth rates

Japanese stocks set the global trend in early 2026: the Nikkei 225 and Topix indices showed record dynamics. What's behind this surge? First, political confidence. The victory of the Liberal Democratic Party (LDP) and its leader Sanae Takaichi resolved long-standing questions about policy stability, paving the way for protectionist initiatives. Second, economic stimulus. The reindustrialization plan promises massive budget injections, already fueling domestic demand. Third, defense revaluation. Hints at liberalizing military restrictions sparked frenzied demand for shares of defense giants - Kawasaki Heavy Industries and IHI Corp.

The phenomenal growth of tech sector companies (particularly Kioxia and JX Advanced Metals) is explained by their position in global value chains (GVC). Rising prices for NAND memory and chip materials are driven by the AI supercycle. Here, we see synergy between global demand and Japan's government support.

The success of Sumitomo Metal Mining and JX Advanced Metals confirms the hypothesis of growing demand for critical resources needed for the energy transition and high-tech production.

Markets always love certainty, and the "historic victory" (LDP) gives carte blanche for aggressive economic policy. The plan to support "strategic sectors" is a direct signal to investors that the state will "pour" money into chips, energy, and defense. The expected easing of constitutional restrictions on military potential turns Japan's defense industry from a "sleeping giant" into a full-fledged growth sector (as we see in the stocks of Kawasaki Heavy and IHI).

Kioxia's success (+1000% over the year) is not just luck, but the result of a global shortage of AI capacity. The surge in JX Advanced Metals and Sumitomo Metal shows that investors are snapping up the entire value chain: from rare metals to finished memory modules.

The fact that the Nikkei rose 5% while the S&P 500 fell 1.4% indicates serious capital rotation. Investors are seeking refuge from the overheated US tech sector in Japanese assets, which have long been considered undervalued. Goldman Sachs' upgrade to "overweight" typically triggers inflows of institutional money (funds).

Thus, the Japanese market in 2026 demonstrates a classic example of a bull run driven by a combination of aggressive fiscal policy and leadership in critical technologies. At the same time, Japan in 2026 is an aggressive growth market. This is an excellent opportunity for diversification, but entering assets like Kioxia at the peak after 1000% growth is a strategy with extremely high risk.