Report for the Last Week of October 2025: Crossing the 52,000 Yen Barrier and the 'New Japan' the World Has Seen

Not a weak yen, nor a bubble. A week of growth driven by real strength.

Information as of (JST/ET)

October 31, 2025 23:50 JST / October 31, 2025 10:50 ET

1. Conclusion for this week

The final week of October 2025.
The Tokyo market has finally pushed the Nikkei Stock Average into the 52,000 yen range.
This is the first time in 35 years that the index has hit a new high.
An increase of about 2,500 yen in one week, a rise of over 5%—but this time,
it is not a 'market driven by momentum.'
It was a week where corporate strength truly pushed stock prices higher.

What was particularly impressive was that digital fields such as AI, semiconductors, and automation are
starting to drive corporate investment.
Major companies like Toyota, Sony, Tokyo Electron, and Keyence
accelerated their investments in growth sectors, and along with profit growth,
it was also a week that showed us 'the shape of Japan to come.'

At the Bank of Japan's Monetary Policy Meeting (on the 29th),
they maintained a 'no rush' stance by keeping interest rates unchanged.
That sense of security supported the market, and at the FOMC the following day,
expectations for rate cuts from next spring onwards spread, leading to stock price increases globally.

This week's rise was driven by corporate strength, not by a weak yen.
That is precisely why overseas investors have returned,
strengthening their assessment that 'Japan is once again a country worth investing in.'

And another change is the mindset of individual investors.
Long-term investment through NISA is increasing,
and the trend of 'nurturing carefully' rather than 'making a quick profit' is spreading.

What has become clear throughout this week is that
Japan is slowly beginning to change from an 'economy driven by consumption' to an 'economy that grows through investment.'
The rise in stock prices is the result of this,
and it may be a sign signaling the
beginning of digital capitalism.

2. Facts, Evidence, and Impact

■ Facts

• October 31: The Nikkei Stock Average closed at 52,411 yen (+2.1%), hitting an all-time high.
  For October as a whole, it rose by +16.6%.
  Source: Nippon.com

• BOJ Meeting (10/29): Interest rates kept unchanged (0.5%). Confirmed inflation stability and maintained easing stance.

• FOMC (10/30): Suggested the possibility of rate cuts from next spring onwards. Lower US interest rates encourage the inflow of overseas funds into Japanese stocks.

• Exchange Rate: Hovering around 154 yen to the dollar. The yen is stabilizing, but the trend is shifting toward being led by corporate performance.

• TOPIX and Mothers are also firm. Investment funds are spreading widely from value to growth stocks.

■ Evidence

1. Recovery in corporate capital investment
   The Japanese government's monthly report explicitly states that 'capital expenditure is driving the economy.'
   In particular, domestic investment in the digital sector is up over +7% year-on-year.
   Source: Reuters, 2025/10/29

2. Improvement in profit margins and ROE
   The ROE of major companies has exceeded 10%, and the number of stocks with a PBR below 1x is decreasing.
   A trend where both shareholder returns and reinvestment of capital are being valued.

3. Policy Support
   The subsidy systems under the Takaichi administration's 'Digital Growth Strategy' and 'GX Investment' are also providing a tailwind.

■ Impact

• In the short term, export, manufacturing, and semiconductor-related stocks are leading.

• In the medium term, the improvement in corporate earnings and the cycle of domestic investment are becoming established.

• In the long term, a structural transformation toward 'digital capitalism' is underway.

3. Charts (Weekly Edition)

4. Analysis

◆ Fundamental Analysis

A week where the link between corporate earnings and capital investment clearly emerged.
Toyota, Mitsubishi Corporation, Keyence, and others announced upward revisions in their financial results, marking a rise backed by the real economy.
In particular, 'Reshoring of domestic production' and 'Automation/AI investment' are common themes.

◆ Technical Analysis

The upward trend has accelerated with the breakthrough of 52,000 yen.
The RSI briefly exceeded 70, showing signs of overheating, but healthy buying continues due to increased trading volume.
Short-term: Buying on dips is dominant
Medium-term: Caution regarding increased volatility
Long-term: Blue-sky trend continues

◆ Macro Analysis

The interest rate gap is widening due to the BOJ maintaining easing and expectations of US rate cuts.
This is supporting the inflow of overseas funds into Japanese stocks.
Additionally, the Takaichi Cabinet's large-scale supplementary budget proposal (reported to be over 1 trillion yen) has boosted investor sentiment.

5. Upcoming Events for Next Week

6. Risks and Countermeasures

While this week's stock price rise was certainly strong,
there are some 'warning signs' emerging behind the scenes.

▪️ Currency Fluctuation Risk

The yen remains weak in the 154 yen per dollar range, but
if this trend reverses sharply, there is a possibility that profit forecasts for export companies could change all at once.
👉 Countermeasure: Consider taking short-term profits on stocks sensitive to currency movements (automobiles, electronic components).

▪️ Risks of a Global Economic Slowdown

While there are expectations of interest rate cuts in the U.S.,
there are also signs of a slowdown in corporate capital investment and employment data.
👉 Action: From companies highly dependent on exports, diversify into defensive assets such asdomestic demand, consumer-related, and high-dividend stocksas well.

▪️ Risks of Stock Market Overheating

Indicators such as RSI and MACD show that short-term overheating is somewhat strong.
👉 Action: Adopt a 'two-stage' approach of locking in profits while aiming to buy on dips.
　Not rushing and being conscious of 'staying in the market for the long term' is what suits the current market.

7. Summary of the Week (3 Key Points + α)

1️⃣ The Nikkei Stock Average reached the 52,000 yen level.
　Japanese stocks are rising not because of a 'weak yen,' but due tocorporate strength and investment cycles.

2️⃣ Capital investment and digitalization have become new pillars of growth.
　The wave of AI, semiconductors, and automation is pushing up the Japanese economy,
　and companies are shifting their stance from 'defensive' to 'offensive'.

3️⃣ The 'long-term investment mindset' of individual investors has begun to take root.
　With the spread of NISA, stocks are shifting from being 'targets for short-term selling' to 'means to nurture the future'.

✨ And in a word—this week, the Japanese market regained its confidence in the future.
'Once again, Japan is becoming a country worth investing in.'
It was a symbolic seven days that gave us a premonition of that.

💡 Trivia of the Week: How Capital Investment Changes the 'Future of Japanese Companies'

We often hear about the 'recovery in capital investment' lately.
However, current investment is not just about 'building factories'.
It is centered on investments in infrastructure that supports digital technology, such as AI servers, data centers, robots, and semiconductor manufacturing equipment.

These movements may seem subtle at first glance, but they are significantly changing the nature of companies.
Productivity increases, profits grow, and this leads to further investment.
As this 'quiet cycle' continues, stock prices will rise based on real strength rather than speculation.

In other words, the rise in Japanese stocks happening now is largely driven by
'corporate reinvestment' rather than 'monetary policy'.
This may be a sign thatJapan is returning to being a 'manufacturing country' once again.

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