日本股票策略投资者报告：去风险持续：风险出清，机遇显现

Morgan Stanley MUFG Securities Co., Ltd.+Sho NakazawaEquity Strategist De-Risking Continues: Risks Out, Opportunities In Key Takeaways With escalation and de-escalation risks in the Middle East coexisting, investors have continued to de-risk, while maintaining Looking beyond the Middle East, the next key risk is a potential supply-chain shock in Southeast Asia, including possible The core themes for Japanese equities remain unchanged—inflation, economic security, and national resilience. In light ofdevelopments in the Middle East, we see scope for heightened investor interest in energy security. Against a backdrop of deteriorating global macro visibility, we are increasingly focused on Japan-specific catalysts. In theupcoming wave of medium-term management plan announcements, particular attention should be paid to companies that haveseen CEO or CFO changes. Morgan Stanley does and seeks to do business withcompanies covered in Morgan Stanley Research. As a result,investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of Morgan StanleyResearch. Investors should consider Morgan Stanley For analyst certification and other important disclosures,refer to the Disclosure Section, located at the end of thisreport. += Analysts employed by non-U.S. affiliates are not registeredwith FINRA, may not be associated persons of the memberand may not be subject to FINRA restrictions oncommunications with a subject company, public appearances 4 reasons we are bullish on Japan equities Japan equities: moving beyond a simple cycle to pricing in a redesign of the national structure Progress in corporate Entrenched stable, sustainedinflation Rising household Japan equitybuying via NISA Expect long Takaichi administration / faster growth Since the TSE market revamp in Apr2022 and subsequent reforms, PrimePBR is up c.40%. In 2026, a CorporateGovernance Code revision (aroundJun) is expected to push better useof cash. Further reform should lift The LDP led by PM Takaichiwon 316Lower House seats, a landslide witha solo >2/3 majority.Via (1) higher policy visibility, (2)faster decision-making, and (3)higher execution certainty on growthstrategy, this should support both With stable, sustained inflation, bothcorporates and households arerethinking balance-sheet allocation.NISA supports this trend. From Jan2027, "Kids NISA" (tentative) isplanned, allowing under-18s to investup to JPY 0.6m/yr (JPY 6.0m total) Japan is shifting to a phase where theoutput gap narrows and inflationmoves toward the 2% target.This shift opens a path to sustainablegrowth, wage gains, more flexible MS TOPIX forecast (end-2026): 4,250pt In an unstable global macro environment, we see a large dispersion between our bull and bear scenarios The LDP under Takaichisecuring>2/3 in the Lower House should bepositive for earnings via fiscalpolicy/national resilience/industrialpolicy. Base case JPY EPS growth: +12%in CY2026, +13% the following year. We see TOPIX potentially tradingup to 17.0x forward P/E. That is a 5pt P/E discount vs. theUS team‘s S&P 500 base casemultiple (near long-run avg), andsimilar to the Europe team's MSCI Meanwhile, the bull/bear gap iswide. MS TOPIX forecast (end-2026): 4,250pt The LDP led by Takaichi securing a2/3+ majority in the Lower Houseelection should be positive forcorporate earnings via fiscal policy, TOPIX 12M fwd EPS has been in aclear uptrend since bottoming lastsummer (after a brief dip when UStariff concerns peaked). Our new TOPIX forward P/Eassumption (17.0x) is in line with MS TOPIX forecast (end-2026): 4,250pt Japanese companies remain focused on margin expansion USD/JPY and Japan equities showa positive correlation, but theregression beta has trended downover the past decade sinceAbenomics, suggesting FX USD/JPY is not the only driver of Japan equity upside TOPIX sensitivity to USD/JPY Since experiencing higher importprices post-COVID, Japanese firmshave been steadily working toexpand margins. This should also reduce thedownside pressure on earnings Therefore, we do not view USD/JPYas the sole driver of JPY- MS TOPIX forecast (end-2026): 4,250pt In an unstable global macro environment, we see a large dispersion between our bull and bear scenarios 3Q results: upward revisions tocompany guidance were moreprevalent than usual, with notable 3Q results: notable beats vs. consensus Post-election, Japan equities roseon P/E expansion, but 3Q resultsshowed steady EPS growth. Equities have risen sharply,consistent with earnings upside. MS TOPIX target (end-2026): 4,250pt In an unstable global macro environment, we see a large dispersion between our bull and bear scenarios External demand–related stocks continue to show solid earnings, though revisions have External demand–related stockshave continued to outperform amida stronger USD/JPY. Although their revision index hasrecently begun to lose some MS TOPIX target (end-2026): 4,250pt In an