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Bank of America analysts believe Japan’s stock rally has more room to grow and could keep going strong into 2025. They say the push is being powered by better earnings forecasts and more positive revisions after companies reported their first-quarter results.
Japanese markets, including the Nikkei and TOPIX, are already hitting record highs. Even though valuations have gone up, the analysts argue that this rise is backed by stronger earnings expectations rather than just hype.
They admit the rally could slow down for a while, but they expect stability to return from late September. Looking further ahead, they see plenty of upside because forecasts for next year’s profits look much stronger than this year’s.
From October, Japan’s financial calendar enters its second half, which means predictions for the next fiscal year will weigh more heavily. This should give an extra boost to confidence about recovery.
The bank also expects more companies to raise their profit guidance when interim results are out, which could improve earnings forecasts even further.
Overall, Bank of America says it remains positive on Japanese stocks. They point to clearer visibility on profits, as well as opportunities in areas like artificial intelligence and inflation-driven sectors.