By Satoshi Sugiyama
TOKYO, Feb 25 (Reuters) – Japan’s Nikkei share average will probably gain only marginally through June before it pushes past the key psychological 60,000 mark by the middle of next year, a Reuters poll of equity strategists showed.
The benchmark index, up over 13% so far this year, has been supported by strong corporate earnings and optimism over fiscal stimulus under Prime Minister Sanae Takaichi.
The Nikkei hit a record intraday high of 58,015.08 on February 12, days after Takaichi’s landslide victory in a snap election for the lower house.
According to the median forecast of 15 analysts polled between February 13 and February 24, the index will stand at 57,500 at the end of June, about 0.3% above Tuesday’s close of 57,321.09. That forecast was higher than 52,000 projected in a November poll.
“Given the rapid run-up so far, we expect a period of time-based consolidation to continue for a while to dispel the sense of overvaluation,” said Hiroshi Namioka, chief strategist at T&D Asset Management. “However, we’re not expecting a price pullback.”
Median forecasts showed the Nikkei reaching 58,500 by the end of 2026 and climbing to 60,750 by mid-2027.
Foreign investor inflows are also expected to gather momentum amid a solid domestic earnings outlook, said Yugo Tsuboi, chief strategist at Daiwa Securities.
The latest government data showed foreign investors bought a net 1.42 trillion yen ($9.16 billion) worth of Japanese stocks in the week to February 14, the largest weekly inflow since last October, helping lift the market to record highs.
Strategists were also asked about artificial intelligence and the risk of a pullback in share prices. All 10 respondents said their views on AI as a driver of equities had changed little over the past three months.
Demand across data centre supply chains, including semiconductors, chipmaking equipment and optical fibre should remain strong as long as U.S. hyperscalers continue investing in AI, said Kiyohide Nagata, chief strategist at Tokai Tokyo Intelligence Laboratory.
At the same time, selling pressure has intensified in sectors such as software over the past three months as companies in those areas could face disruption from AI, Nagata said.
Nine of 10 respondents said a correction in the Nikkei, meaning a decline of 10% from recent highs, was unlikely over the coming three months.
“U.S. equities are showing some wobble, such as the AI rally pausing … but a sharp correction looks unlikely. And any spillover to Japan should be mild,” said Hitoshi Asaoka, chief strategist at Asset Management One.
(Other stories from the Reuters Q1 global stock markets poll package)
($1 = 155.0800 yen)
(Reporting by Satoshi Sugiyama; Additional reporting by Junko Fujita and Rocky Swift; Polling by Sarupya Ganguly; Editing by Vivek Mishra and Tomasz Janowski)
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