Japan has moved back into the focus of international investors. The Nikkei 225 reached a record of about 73,000 points in June and is still more than 40% higher than twelve months ago, even after a decline of around 7% from that peak, which came as doubts about AI spending weighed on chip and technology shares. The broader TOPIX has more than doubled since the start of 2023 including dividends.
Part of this development can be explained by a change in corporate behaviour. In 2023 the Tokyo Stock Exchange asked listed companies to pay closer attention to their cost of capital and share price. Since then, the share of TOPIX companies trading below book value has fallen from 51% to 38%, and buybacks worth 16.5 trillion yen were announced in the first half of 2026 alone.
Inflation, Rates and a Weak Yen
The economic environment has changed as well. After decades of falling or stagnant prices, Japan now faces inflation again. Consumer prices in Tokyo excluding fresh food rose 2.7% in September, and the Bank of Japan raised its policy rate to 1.25% on 18 September, the highest level since 1995 and the second increase within three months.
The yen adds a further factor. At the end of June it fell to about 162 per US dollar, its weakest level since 1986, and the Japanese authorities have intervened in the currency market several times since, in August together with the United States. A weak yen increases the yen earnings of exporters, but it makes imported energy and raw materials more expensive. For investors outside Japan the effect works in both directions: Japanese shares become cheaper to buy, while the return is reduced when the yen is converted back into euros or francs.
What Foreign Investors Need
Our Asia post, part of the Investing Beyond Your Home Market series, ranks Japan among the more accessible markets. Most international brokers offer direct trading on the Tokyo Stock Exchange without a local account or registration. Three practical points are worth knowing in advance. Orders are generally placed in units of 100 shares, so a position in a high-priced stock can be larger than expected. Prices and dividends are in yen, so the broker's currency conversion fee becomes part of the cost. Japan also withholds 20% tax on dividends by default, reduced to around 10% for Swiss residents under the tax treaty, and to lower rates under some other treaties, depending on the size of the holding. The Asia post covers these points in more detail.
We cover both the Nikkei 225 and the TOPIX 100. This post uses the TOPIX 100, which tracks the 100 largest and most liquid companies on the Tokyo Stock Exchange, and six of its ten best-ranked names also appear in the Nikkei 225 Top 10. Here is the TOPIX 100 Top 10 by 360° View, which compares each company with its peers on a scale from 0 to 100:
Name | 360° View | Sentiment | Combined | Value | Growth | Safety |
|---|---|---|---|---|---|---|
1. XX-Large • Oil & Gas Refining | 100 | 71 | 98 | 92 | 82 | 68 |
2. X-Large • Industrial Machinery | 98 | 90 | 84 | 53 | 65 | 94 |
3. X-Large • Electronic Components | 98 | 71 | 98 | 79 | 57 | 79 |
4. X-Large • Health Care Equipment | 96 | 100 | 85 | 42 | 85 | 67 |
5. XX-Large • IT Consulting & Other Services | 96 | 94 | 77 | 71 | 79 | 52 |
6. X-Large • Marine | 96 | 87 | 90 | 82 | 83 | 60 |
7. XX-Large • Steel | 94 | 85 | 88 | 88 | 99 | 39 |
8. XX-Large • Trading & Distribution | 94 | 62 | 100 | 68 | 93 | 68 |
9. X-Large • Semiconductors | 94 | 69 | 94 | 79 | 87 | 54 |
10. X-Large • Pharmaceuticals | 94 | 30 | 96 | 98 | 83 | 52 |
Strong Scores, Different Profiles
All ten companies score at least 94 on the 360° View, yet the sub-ranks show clear differences. ENEOS leads with a perfect 100 and a Value Rank of 92, in a year in which Middle East tensions have raised energy prices. SMC has the highest Safety Rank on the list at 94. Nippon Steel has the best Growth Rank at 99, but its Safety Rank of 39 is the lowest. Astellas Pharma shows the opposite pattern with a Value Rank of 98 and a Sentiment Rank of only 30, which indicates that the market is still cautious about the company.
Transport has always interested me, so Nippon Yusen was the first name to catch my attention: its 360° View of 96 comes with a Value Rank of 82 and a Growth Rank of 83. Mitsubishi Corp. reaches a perfect 100 on the Combined Rank, which brings together Value, Growth and Safety.
Tokyo Electron, Advantest and SoftBank Group, which are closely tied to the AI trade and have fallen sharply in the recent sell-off, do not appear in the Top 10. The list instead covers energy, steel, trading, shipping, industrial machinery, electronic components and health care.
Where Sentiment Diverges
The Sentiment Top 10 of the TOPIX 100 shows which companies the market currently favours. It has only one name in common with the 360° View list: Terumo, with a Sentiment Rank of 100 and a 360° View of 96. Asics takes the top position with a Sentiment Rank of 100 and a Growth Rank of 97, but its Value Rank of 9 shows that investors already pay a high price for that growth. Panasonic and Mitsui Fudosan also reach 100 on Sentiment, whereas their 360° View ranks of 53 and 38 show that market sentiment is stronger than their overall standing against peers.
Hitachi and Mitsubishi Heavy Industries, both at 96 on Sentiment, have Combined Ranks of only 31 and 20. Suzuki Motor, Shin-Etsu Chemical and Murata Manufacturing complete the list, and Sumitomo Electric has a Growth Rank of 99. High Sentiment is not a warning sign in itself, as it can also be an early indication of improving fundamentals, but it is a reason to read both lists together.
More Ways to Rank Japan
The Obermatt app offers a Top 10 list for each of the ranks above and for Dividend Yield, for both the TOPIX 100 and the Nikkei 225. Investors who focus on valuation can start with the Value Top 10, those who prioritise stability with the Safety Top 10, and those who look for income with the Dividend Yield list. The Nikkei 225 Top 10 by 360° View has four names that are not in the TOPIX list: Meiji, Mitsubishi Materials, Omron and Tosoh, which all score at least 96.
All of these lists are available to Obermatt subscribers in the app. Explore the plans and start your free trial