Japan’s stock markets continue to set new highs as pro-reform policies and robust foreign inflows buoy investor confidence, outweighing concerns about political volatility, according to CNBC.

Both the Nikkei 225 and TOPIX indices have broken past ceiling levels, underpinned by optimism around structural reforms proposed by Japan’s government. These include measures to deregulate sectors, stimulate corporate governance, and enhance capital returns -moves seen by markets as long-term catalysts for earnings growth.

Foreign capital has poured in aggressively, with overseas investors viewing Japan as a relatively stable destination in a turbulent global landscape. Their purchases are helping sustain momentum in equities, despite lingering risks on the political front, such as leadership uncertainty and policy backlash.

Analysts note that the infusion of external demand is more than just a sentiment play: it’s reinforcing valuations and providing a supportive backdrop for domestic fund flows. Some strategists believe that Japan is benefiting from a “safe-haven rotation” as global investors reallocate assets amid geopolitical and macro pressures elsewhere.

Still, some caveats remain. Critics warn that reflation depends on follow-through in structural changes, and that political disruptions could undermine investor confidence. Moreover, sustained gains may require earnings to catch up with lofty valuations.

For now, however, Japan’s markets seem to be navigating the balance — riding the wave of foreign capital and reform optimism while managing political noise. The key question moving forward is whether corporate results and policy execution can live up to market expectations.

End Notes

Source: https://www.cnbc.com/2025/09/24/japan-shares-breaking-records-reforms-foreign-inflows-outweigh-political-risks-nikkei-225-topix.html