Bank of America raised its year-end targets for Japan’s TOPIX and Nikkei 225 indices, citing robust third-quarter performance and a favorable political climate. The brokerage now projects the TOPIX to reach 4,100 and the Nikkei 225 to hit 61,000 by year-end, up from previous estimates. Masashi Akutsu and Tetsuhiro Tokuyama, BofA strategists, highlighted that 58% of TOPIX companies exceeded earnings expectations in Q3, signaling stronger-than-anticipated economic momentum.

They noted that earnings growth for fiscal 2026 and 2027 is projected at 13% and 10%, respectively, driven by improved return on equity (ROE) and policy stability. The strategists emphasized that the Nikkei 225 could achieve a fourth consecutive annual high, fueled by sustained earnings recovery and the Liberal Democratic Party’s electoral dominance. P/E ratios for Japanese equities have surged to 17x, surpassing historical thresholds, suggesting a shift in market valuation dynamics.