ROE

This is Part 1 of a two-part series on the next phase of Japan’s corporate governance revolution. Part 2 covers the consequences: the delisting wave, the 2026 AGM season and where to look. Japanese equities are outperforming every major developed market in 2026. TOPIX is up 29% over the past year while the S&P 500 has returned 15% and the DAX has gone negative. The YTD gap is wider still. With the BOJ hiking while the Fed holds, local currency returns understate the divergence for dollar-based investors. ...

If there is one thing that separates the current Japanese equity rally from previous false dawns, it is the corporate governance revolution. This is not a government talking point or a consultant’s slide deck. It is a measurable, accelerating change in how Japanese companies allocate capital, return cash to shareholders and engage with investors. For overseas investors evaluating the Japan opportunity, understanding this reform is essential. It explains why buybacks are hitting records, why cross-shareholdings are being unwound and why the valuation gap with the rest of the world is likely to narrow. ...