Global X ETFs Australia senior investment strategist Marc Jocum suggests the Liberal Democratic Party’s (LDP) recent victory in Japan provides Prime Minister Sanae Takaichi with a stable majority, thereby reducing coalition constraints. This outcome potentially paves the way for decisive action on key economic initiatives, including fiscal stimulus measures, advancements in artificial intelligence and semiconductors, enhanced energy security, and strategic reforms.
According to Jocum, the markets now have greater clarity regarding fiscal policy through to the next election in 2028. Corporate governance reforms, an increase in return on equity, accelerating dividends and buybacks, alongside potentially strong domestic capital inflows (driven by household savings) are all gaining momentum. These factors are collectively underpinning a sustained re-rating in Japanese equities, although risks associated with rising bond yields and fiscal debt remain important to monitor.
Jocum highlighted that Japan remains one of Global X ETFs’ top investment recommendations for 2026. He cites the country’s robust earnings growth, disciplined capital allocation strategies, and appealing valuations, currently at 19 times forward price-to-earnings (PE), as factors aligning to support multi-year structural upside. Jocum added, “Japan was long seen as a contrarian investment but is now a reform story with meaningful momentum.”
He concludes that political stability, improving returns on capital, domestic capital deployment, and reasonable valuations are all positive indicators. The recent snap election victory has solidified confidence in this trajectory. Global X ETFs provides investors with access to a range of thematic and core equity investment solutions. The firm is dedicated to providing insightful analysis and innovative investment strategies.
