Goldman Sachs Raises 12-Month TOPIX Target to 4,400, Implying ~11% Upside
N.R. Finch
Goldman Sachs lifted its 12-month TOPIX target to 4,400, implying about 11% upside from the current ~3,957 level — driven by a better-than-expected earnings season, sustained foreign inflows, and record shareholder returns, all of which reshape the global case for allocating to Japan.
Why is Goldman raising its target now?
Japan's full-year earnings season beat expectations. Goldman upgraded its FY26/FY27 EPS growth forecasts from +7%/+11% to +11%/+11%, and added a new FY28 estimate of +9%.
This means → Goldman sees cumulative EPS growth of 33% over three fiscal years — that is the core case behind the target hike.
The 3-month and 6-month targets are set at 4,100 and 4,200, implying just 4% and 6% upside. In plain terms = the near-term move is modest; the real space is on a 12-month horizon.
How much room is left on valuation?
TOPIX currently trades at roughly 16.7x forward P/E, still below the 17.5x peak hit in February. Goldman keeps 17.5x as its target multiple.
This reflects a specific sequence: the February valuation peak came after PM Takaichi Sanae won the lower-house election, then Middle East tensions compressed the multiple to as low as 15.0x — the market is now recovering from that trough.
On FX, Goldman assumes USD/JPY at 157 / 154 / 150 for FY26–28. A gradually stronger yen supports yen-denominated corporate earnings.
How much have foreigners actually bought?
Since April 2025, cumulative foreign net inflows into Japanese equities have reached ¥16 trillion. In the week of May 18–22 alone, foreigners net-bought ¥46.4 billion of TOPIX Prime cash equities, while retail and domestic institutions net-sold ¥14.5 billion and ¥4.7 billion respectively.
This means → foreigners are the marginal price-setters in Japanese stocks right now — domestic investors are on the other side.
Goldman notes that global active funds remain underweight Japan. In plain terms = the big money has not fully rotated in yet, and further allocation is still on the table.
Why do shareholder returns matter here?
TOPIX constituents delivered total shareholder returns of ¥43 trillion in FY2025, with payout ratios improving year-on-year. As of May 28, 2026, announced buybacks for the current fiscal year are running at a record pace for this point in the calendar.
This reflects a structural shift in Japanese corporate governance — from hoarding profits to actively returning them. That shift is a durable draw for foreign capital.
Where does Japan rank globally?
Goldman's 12-month expected upside across major markets: TOPIX 11%, S&P 500 roughly 10% (target 8,300, just raised earlier this week), MSCI Asia-Pacific ex-Japan about 12%, Euro Stoxx 600 roughly flat.
This means → Japan's expected return ranks near the top among major markets, only slightly behind Asia-Pacific ex-Japan.
On earnings growth, Goldman's FY26 EPS forecast for TOPIX (+11%) trails the consensus (+13%), but its FY27 call (+11%) nearly matches the street (+12%). In plain terms = Goldman is not the most bullish voice in the market, but it is considerably more bullish than it was before.
Content is for reference only, not financial advice.