(Dec 30): Japan’s benchmark Topix index closed at a record year-end high for 2025, surpassing even the peak 36 years ago reached during the infamous bubble economy.
The index closed the year’s final session at 3,408.97, higher than the 2,881.37 recorded at the end of 1989. It gained 22% in 2025, marking a third consecutive annual rise.
The Topix plunged in April in the aftershock of US President Donald Trump’s “Liberation Day” tariffs, before hitting a record high in July amid easing trade war concerns and the relative undervaluation of Japanese stocks compared with stocks in the US and Europe. It continued to reach new highs thereafter, buoyed by expectations for improving corporate earnings, the Takaichi government and a global money glut.
The new year-end high demonstrates “the broadening base of Japanese stock buying,” said Hideyuki Ishiguro, chief strategist at Nomura Asset Management. “The trend of undervaluation correction is intensifying as the economy, companies, and politics change,” leading to rallies extending beyond AI-related stocks to include financials like banks, as well as domestic demand stocks such as construction and real estate, he added.
Buying interest also expanded into small cap stocks, indicating a broadening of the market’s appeal. The small- and mid-cap segments of the Topix index rose 27% and 26% respectively this year, outperforming the 21% gain for large-caps for the first time since 2022.
See also: Asian stocks edge lower as silver, gold recover
The blue-chip Nikkei 225 Stock Average closed at 50,339.48, marking a record year-end high for the second consecutive year. Contributions from certain large-cap stocks were significant, driving the annual increase to 26%, beating the Topix for a third straight year.
The global AI-rally has been a tailwind particularly for the Nikkei, but recently the Topix’s resilience has been more noticeable. The Topix is likely to outperform the Nikkei in 2026 as “the planned revision of the Corporate Governance Code will encourage companies to utilise cash, further improving price-to-book ratios, which will lead to buying of a broad range of stocks,” Ishiguro said.
Uploaded by Magessan Varatharaja
