UBS Equity Preference List Beneficiaries of Japan s inflation 2026 07 31

31 July 2026, 09:23 UTC Chief Investment Office GWM Investment Research

Beneficiaries of Japan’s inflation Equity preferences

A sustainable inflationary environment for the first time in nearly 30 years has important potential implications for Japanese companies in the years ahead. For Chisa Kobayashi one, corporate governance reform and business portfolio optimization are likely to UBS SuMi TRUST Wealth Management Co., Ltd. be in focus. Please see important disclaimers and A sustainable inflationary environment for the first time in nearly 30 years has disclosures at the end of this important potential implications for Japanese companies in the years ahead. document. Corporate governance reform and business portfolio optimization are likely to be in focus. Corporate governance reforms should become visible in the near term. Improving growth prospects should motivate Japanese companies to utilize their cash, and increase share buybacks and capex. The Tokyo Stock Exchange’s push to increase corporate value and ROE should also strongly support this trend. Business reforms may take some time to materialize but remain a medium-term rerating catalyst. To capture the biggest potential changes in decades amid of global uncertainty, we prefer quality stocks with high ROE and share buyback potential, as well as select domestic-oriented stocks to benefit from moderate inflation and wage growth. We believe a basket of select stocks will outperform against the benchmark index over the next six to 12 months.

Latest changes: We have added Kokusai Electric to our portfolio and have removed East Japan Railway and Sumitomo Realty & Development.

Most Preferred Company Changes* Currency Weight

Advantest JPY 3.7% ANA Holdings JPY 3.7% CKD JPY 3.7% Daifuku JPY 3.7% East Japan Railway Removed JPY 3.7% Ebara Corporation JPY 3.7% Fanuc JPY 3.7% Hitachi JPY 3.7% Ibiden JPY 3.7% Japan Post Bank JPY 3.7% Kawasaki Heavy Industries JPY 3.7% Keyence JPY 3.7% Kokusai Electric Added JPY 3.7% Mitsubishi Electric JPY 3.7% Mitsubishi Estate JPY 3.7% Mitsubishi Heavy Industries JPY 3.7% Mitsubishi UFJ Financial Group JPY 3.7%

Chief Investment Office GWM, 31 July 2026 Page 1 of 26

Beneficiaries of Japan's inflation

Company Changes* Currency Weight

Mitsui Kinzoku JPY 3.7% Murata Manufacturing JPY 3.7% Resona Holdings JPY 3.7% Sony Group JPY 3.7% Sumitomo Corporation JPY 3.7% Sumitomo Mitsui Financial Group JPY 3.7% Sumitomo Realty & Development Removed JPY 3.7% Suzuki Motor JPY 3.7% TDK JPY 3.7% THK JPY 3.7% Tokyo Electron JPY 3.7% Toyota Motor JPY 3.7%

Source: UBS, Consider potential trading restrictions, all figures are rounded *Changes since the last publication

Positioning and key trends A sustainable inflationary environment in Japan for the first time in nearly 30 years has important potential implications for local companies in the years ahead. For one, corporate governance and business portfolio optimization are likely to be in focus.

We believe the former is likely to be visible in the near term, providing investment opportunities in the next six to 12 months. The latter may take some time to materialize once both corporations and consumers gain confidence that inflation is the norm. But it remains a catalyst to watch as it will likely provide re-rating potential over the long run and pull up Japanese equities that have been considered value stocks for decades.

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