Nikkei 225 Breaks Above 68,000 for the First Time, Led by Tech Stocks
Alina Collins
The Nikkei 225 crossed 68,000 intraday on Wednesday for the first time, hitting an all-time high as chip-equipment stocks surged; Goldman Sachs and Citi both raised targets, though rising JGB yields pose a valuation risk.
Which stocks led the charge?
Chip-equipment maker Tokyo Electron jumped 10.1%; chip-testing firm Advantest rose 4.6% — both riding a global wave of AI-driven buying.
This means → the rally's engine is not broad-based blue chips but the semiconductor equipment chain.
The yen weakened in tandem: USD/JPY briefly breached the 160 mark, touching 160.44 before pulling back to 159.86.
Why are two Wall Street houses bullish at the same time?
Goldman Sachs raised its 12-month TOPIX target from 4,200 to 4,400 — implying roughly 11% upside — and lifted FY26/27 EPS growth forecasts to +11% each, adding a new FY28 forecast of +9%.
Goldman noted that cumulative net foreign inflows since April 2025 have reached ¥16 trillion, while corporate shareholder returns hit a record.
Citi went further: TOPIX target at 4,500, Nikkei 225 peak around 72,000, and a call that "70,000 will be breached before year-end."
In plain terms = both banks are betting on the same thesis — earnings still rising, foreign money still flowing in, buybacks still running. The trend is not over.
Can fundamentals keep up?
Citi's data: TOPIX constituents guide for revenue +4.2% YoY, operating profit +8.2%, net income +7.6%.
Near-term pressure comes from conservative initial guidance, which is pulling analyst estimates down temporarily — this reflects a guidance-timing gap, not deteriorating earnings.
Citi sees no end-of-trend signal across its three key threads: earnings, ROE, and fund flows.
What is the biggest risk?
TOPIX trades at a 12-month forward P/E of 16.8×, near the top of its range over the past decade-plus.
Citi argues that if average ROE moves toward 11%–12%, a P/E above 17× remains defensible.
The real watch-point is a "bad rate rise": if fiscal concerns intensify and the 10-year JGB yield breaks 3% on rising real rates, valuation pressure would mount sharply.
Japan's 10-year real rate has edged up to roughly 25 basis points — this risk is not yet the market's main narrative, but it bears monitoring.
How did the rest of Asia-Pacific fare?
Taiwan's TAIEX rose 1.8%; Australia's S&P/ASX 200 gained 0.3% to 8,747.10.
Hong Kong's Hang Seng fell 0.9% to 25,804.51; the Shanghai Composite slipped 0.2% to 4,068.77.
South Korea's market was closed for a public holiday.
Content is for reference only, not financial advice.