2608 japan s growth strategy a powerful tailwind for equities and active investing emea

Japan’s Growth Strategy: a powerful tailwind for equities and active investing The road to a JPY 370 trillion growth opportunity

The government’s Growth Strategy targets more than JPY 370 trillion of investment across key strategic industries by FY2040. Combined with reforms to corporate governance and capital allocation, the measures are expected to support earnings growth, broaden market opportunities and provide a strong tailwind for Japanese equities.

By Junichi Takayama, Japan Equity Investment Director 12 August 2026 Japan’s equity market has surged to record highs in 2026, with the Nikkei briefly rising above 70,000 and the TOPIX also reaching a new high. The equity market surge reflects renewed investor confidence in the country’s earnings outlook, corporate reforms and policy direction, as well as a growing focus on companies seen as beneficiaries of AI.

Against this backdrop, the government released its much-awaited Growth Strategy (the “Strategy”) on 21 July—a well-timed announcement to refocus investor attention on Japan’s economic and market prospects following the end of the World Cup.

The Strategy aims to transform the economy into an investment-led growth model through large-scale public-private investment, innovation and structural reform. The government has identified 17 strategic areas of growth and 62 priority products and technologies, spanning AI, semiconductors, digital infrastructure, robotics, healthcare, energy transition, aerospace, materials and content industries.

More than Japanese yen (JPY) 370 trillion (approximately US dollar (USD) 2.35 trillion) of public and private investment is expected to be deployed across these areas by FY2040 (see Exhibit 1).

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Japan’s Growth Strategy: a powerful tailwind for equities and active investing

Exhibit 1: Strategic areas of focus identified by Japan

Investment 17 strategic areas of amount* Major products & technologies focus* (JPY trn) AI/semiconductors 101.6 Physical AI, semiconductors Digital/cybersecurity 55.4 Data platforms, government & local government DX infrastructure Information & 28.8 Optical networks, submarine cable, next generation wireless communications Quantum technology 13.2 Quantum computing Defence industry 5.04 Drones, naval vessels Aerospace & Space 18.5 Civil aircraft, unmanned aerial vehicles, aircraft systems, rockets Development of ocean drones (autonomous surface and underwater Marine technology 3.3 vehicles) Shipbuilding 1.1 Next-generation ships Materials 16.9 Permanent magnets Biopharmaceutical manufacturing, biopharmaceuticals, regenerative Biotechnology 33.6 medicine products Drug discovery/ Pharmaceuticals, regenerative medicine products, vaccines, 64.1 advanced healthcare biopharmaceuticals and regenerative medicine products (relisted) Resources/Energy 28.8 Next-generation solar batteries, hydrogen, green steel Security/GX Nuclear fusion power 3.1 Nuclear fusion power generation Disaster prevention/ 2.6 Fortifying infrastructure against natural disasters such as earthquakes national resilience Port & logistics 1.2 Port cargo-handling machinery Food technology 9.7 Plant factories, land-based aquaculture Content 33.7 Gaming, animation, manga, music, films

*Includes public and private sector investment and represents cumulative investment through 2026–2040, with the applicable period varying by category; estimates could be subject to revision over time.

Source: Amova Asset Management based on Japanese government documents

The Strategy is expected to generate an estimated JPY 230 trillion of domestic private-sector capital investment per year and nominal GDP approaching JPY 1,100 trillion by FY2040. 1 To achieve this, the government will introduce a new investment framework, multi-year policy support, stronger public-private partnerships and measures to mobilise private capital.

Active Investing in the AI opportunity Unlike the US, where AI opportunities are concentrated in a handful of mega-cap technology stocks, Japan offers broad- based exposure across the AI value chain. For example, many AI beneficiaries were the market leaders in the first half of 2026 (see Exhibit 2). The Strategy highlights…