Japanese Equities Today: What Our Overseas Investor Survey Reveals

Overseas investors remain constructive on Japanese equities, but the market has moved from a broad valuation-recovery trade toward selective investment in companies delivering transformation, earnings growth, and better capital efficiency.

• Project Bridge’s surveys have tracked overseas investor sentiment from 2022 through October 2026; bullishness rose through late 2023, weakened after the summer 2024 sell-off, and recovered from 2025 onward.
• In the September–October 2026 survey, two-thirds of respondents were bullish, about 30% were neutral, and only a small minority were bearish, although the changing respondent pools prevent strict period-to-period comparison.
• Investors now cite corporate transformation, earnings growth, and fiscal and monetary policy more often than low valuations, while AI and semiconductor exposure remains attractive but volatile after a correction in related stocks.
• Respondents want companies to disclose specific transformation measures, implementation timelines, and the expected effects on profitability and capital efficiency rather than merely state broad intentions.
• More than half of respondents expect the yen to strengthen, which could support returns for unhedged foreign investors even though a weaker yen would benefit Japanese manufacturers and exporters.

Takeaway: Japanese equities still attract overseas capital, but investors should look beyond market-wide cheapness or AI exposure and assess company-specific execution, earnings growth, capital efficiency, policy sensitivity, and yen risk.