Japan Stocks See World-Beating Start to 2026 on Takaichi Boost

auh5xto2yskwsvw{]ukifxrk_media_dl_1.png BloombergArticle content(Bloomberg) — Japanese equities are enjoying a knockout start to 2026 as Prime Minister Sanae Takaichi’s growth policies propel stocks from chips to defense to the top of developed market rankings.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentThe three best performers on the MSCI World Index so far this year are Japanese firms, with chipmaker Kioxia Holdings Corp. gaining almost 120% to top the list. Defense contractor Kawasaki Heavy Industries Ltd. and chip materials producer JX Advanced Metals Corp. are not far behind, both rising more than 60%.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentThe world-beating gains are part of a record rally for Japan’s stock benchmarks, with the Topix and Nikkei 225 Stock Average hitting fresh all-time highs this week after Takaichi’s ruling Liberal Democratic Party secured a historic victory in Sunday’s election. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentExpectations of more fiscal expansion and political stability under a newly-bolstered Takaichi government have helped drive the Nikkei benchmark up more than 5% since the election, far outperforming the S&P 500’s 1.4% fall through Thursday. Tech, defense, energy and construction have been among the biggest beneficiaries as investors gear up for an influx of government spending under Takaichi’s plan to invigorate “strategic” industries. Article content“Japan has emerged as one of the standout investment destinations at the start of 2026,’ said Russell Shor, a senior market analyst at trading platform Tradu. “The rally reflects political clarity, renewed confidence in fiscal stimulus, attractive valuations, and improving corporate prospects,” he added. “Investors welcome Prime Minister Sanae Takaichi’s mandate and fresh policy support.”Article contentArticle contentGoldman Sachs strategists also raised their rating on Japanese stocks to overweight in a Friday report, citing hopes for “a period of political stability” and policy tailwinds for “defense, critical resources, shipbuilding, power resources, US re-industrialization plays.”Article contentRead: Japan Defense Stocks Surge on Takaichi’s National Security PlansArticle contentKawasaki Heavy, MSCI World’s second-best performer so far this year, has rallied 20% in the past week alone, fueled by stronger-than-expected quarterly earnings and expectations that Takaichi will use her new mandate to loosen Japan’s constitutional restrictions on its military capacity. Kawasaki’s peer IHI Corp. is also up more than 50% so far this year, placing it in the MSCI index’s top-10 performers.Article contentKioxia, which also topped the index in 2025, surged as much as 15% Friday after its full-year earnings forecast beat market estimates. The NAND maker has climbed over 1,000% in the past 12 months amid soaring memory chip prices, driven by insatiable demand from the AI sector.Article contentRead: Kioxia Extends World’s Top Stock Performance as AI Fuels OutlookTrending As U.S. companies return to Venezuela's oilfields — one Canadian driller has a head start Oil & Gas Ontario issues first permit that opens up old mine tailings for exploration Mining As Canadian bond yields fall, watch for fixed rates to follow Mortgage Rates CRA charged taxpayer instalment interest before he received all his GIC income Taxes Gold sinks in shock selloff as traders cover stock-rout losses Commodities Article contentJX Advanced Metals, which listed in Tokyo in early 2025, has benefited from a global rally in metal prices and surging AI demand. The same tailwinds have boosted Sumitomo Metal Mining Co., which has gained about 60% year-to-date.Article contentJapan’s record-breaking rally is raising some alarm bells, however. With many upsides already priced in, “risks are building,” warned Tradu’s Shor. Article content“The margin for disappointment is narrowing, while technical indicators suggest the Nikkei 225 is overbought in the short term,” he said. The Nikkei was down 0.7% as of 12:30 p.m. in Tokyo. Article content—With assistance from Aya Wagatsuma.Article contentShare this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. As U.S. companies return to Venezuela's oilfields — one Canadian driller has a head start Oil & Gas Ontario issues first permit that opens up old mine tailings for exploration Mining As Canadian bond yields fall, watch for fixed rates to follow Mortgage Rates CRA charged taxpayer instalment interest before he received all his GIC income Taxes Gold sinks in shock selloff as traders cover stock-rout losses Commodities