日本股票策略：为伟大的增长时刻做好准备

Japan Equity Strategy: Prepare for the GreatGrowth Moment Key Takeaways Prepare for the Great Growth Moment: If accelerating AI investment is accompanied by interest-rate stability underpinned byJapan’s fiscal credibility, growth stocks are likely to regain leadership.Continued AI rally remains our base case: Since Liberation Day in April 2025, the effectiveness of a strategy that sells expensiveAI-related stocks and buys cheaper AI-related stocks has increased.Managing the risk of an AI-rally reversal is equally important: We believe puts on stocks that have been bid up on AI narrativesbut lack fundamental earnings support represent one of the more effective risk-management tools in the current environment.Governance reform: With June shareholder meetings and the July revision to the Corporate Governance Code approaching,investors should be cautious about indiscriminately shorting governance-related stocks.Sector preferences: We favor upstream B2B sectors within the supply chain. While banks appear to be attracting greater interestas beneficiaries of higher interest rates and as one of the few uncrowded trades remaining, we maintain our equalweight stanceon the banking sector. 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 StanleyResearch as only a single factor in making their investmentdecision. 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 appearancesand trading securities held by a research analyst account. 4 reasons we are bullish on Japan equities Structural drivers underpinning the long-term Japan equity bull market we have long argued for arestrengthening further Progress in corporategovernance reform Expectation of long Takaichitenure / faster growth strategyincl.nationalsecurity Rising household Japan equityinvestment via NISA Sustained, stable inflation After reforms triggered by the TSEmarket restructuring in Apr 2022,Prime market PBR is up c.40%. In2026,we expecta CG Code revision(around Jun) is to push better use ofcorporate cash. Faster reform shouldlift ROE and support Japan equitiesvia PBR/PER expansion. Japan is shifting to a phase whereinflation moves toward the 2% targetas the output gap gradually narrows.This shift opens a path to sustainablegrowth, wage gains, more flexiblepricing, stronger capex, and higherproductivity. Withsustained, stable inflation,balance-sheet management is beingreassessed not only by corporatesbut also households. NISA supportsthis trend. From Jan 2027, a "KidsNISA" is planned, allowing under-18sto invest up to JPY600k/year. (JPY6mntotal) tax-free via tsumitate. The LDP led by PM Takaichi won 316Lower House seats, a landslide witha solo >2/3 supermajority.Via (1) higher policy predictability, (2)faster decision-making, and (3)higher execution certainty of growthstrategy,this islikely positive forboth mid-term earnings outlook andthe risk premium demanded bycapital markets. Morgan Stanley base-case forecast An energy supply shockfrom Middle East tensionsmodestly drags globalgrowth in 2026, thenrecovery in 2027. AIunderpins demand. –US: AI-led capex drivesgrowth, while higherenergy prices curbconsumption. Fed on holdthrough 2026; expect50bp cuts in early 2027.–Japan faces stagflation-like headwinds (slowergrowth + higher inflation),but underlyingfundamentals remainsolid.–China: resilient on export-led growth; domesticdemand is polarized. The Summit Lies Ahead: MS TOPIX target (end-Jun 2027) 4,300pt Morgan Stanley equity outlook DM equities:weassumelow-teens expected returns.Upside similar acrossUS/Europe/Japan, but wemost prefer US equitiesgiven bull/bear skew andearnings strength. –US has the highestresilience to an energyshock and the clearestearnings rebound. AIcapex cycle continues.–Japan's structural bullnarrative intact.Recommend unhedgedFX exposure. The Summit Lies Ahead: MS TOPIX target (end-Jun 2027) 4,300pt Bullish stance on Japanese equities unchanged Base case assumes Middle Eastde-escalation and avoidance ofmajor supply-chain disruption. TOPIX targets by bear/base/bull case Base-case EPS assumes a lag inpass-through from higher oil costs,c. 2-3ppt below consensus. Equity markets discount futuredevelopments in advance.Assumemid/long-term earningsnormalization can coexist;fwdP/E17.5x. Assuming the past 'lowinflation/low pass-through/lowmargin' regime and treating thehistorical P/E range as a futureupside cap is, in our view,notsufficient. The Summit Lies Ahead: MS TOPIX target (end-Jun 2027) 4,300pt But our bull/bear