Nikkei 225 Soars As US Investors Flock to Japan. Forecast as of 10.11.2025 | LiteFinance
Investor appetite for Japanese tech companies is boosting the Nikkei 225 index. The stock index has posted its best monthly performance since 1990 and is outperforming the S&P 500 index. Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- October was the best month for the Nikkei 225 since 1990.
- US investors’ demand for Japanese securities is growing.
- The weak yen is beneficial to the Japanese stock index.
- Buying the Nikkei 225 with targets at 55,100 and 58,000 is currently relevant.
Monthly Fundamental Forecast for Nikkei 225
Given concerns about US tech companies’ high valuations and the challenges they face in generating substantial returns on their extensive investments, there are always viable alternatives to consider. In October, Japan’s Nikkei 225 exhibited its strongest monthly performance since 1990. Furthermore, companies that have invested heavily in AI have become market leaders. Hitachi shares have added 7.2%, driven by positive quarterly reports.
Saison Asset Management has stated that the Nikkei 225 index exhibits trends similar to those of a technology index. As with the NASDAQ 100, it is influenced by the same factors. An additional driver in the Japanese stock market is the weak yen. Traders are anticipating that the Federal Reserve and the Bank of Japan’s cautious approach will push the USD/JPY rate higher.
Goldman Sachs has observed that US investor enthusiasm for Japanese equities has reached an all-time high since the Abenomics era. US investor participation in Japanese equities is at the highest level since October 2022. The transfer of capital from North America to Asia is driven by the disparity in investment efficiency. While the Nikkei 225 has increased by 30% in dollar terms since the beginning of the year, the S&P 500 has gained only 14%.
Purchases of Japanese Stocks By US Investors
Source: Bloomberg.
The fact that Japan is currently a hot topic is also evidenced by the financial results of the GPIF, one of the world’s largest pension funds. It has posted the best performance since the beginning of 2024. At the same time, returns on investments in local stocks rose by 11%, while returns on foreign stocks rose by 9.8%.
Government Pension Investment Fund’s Revenues
Source: Bloomberg.
The Japanese stock market is going through similar stages to those experienced by the US market in the middle of the year. At that time, non-residents invested in the S&P 500 and hedged the risks of a weakening US dollar by selling derivative instruments. A similar scenario is unfolding with the yen. Despite data from the minutes of the last BoJ meeting indicating an overnight rate hike in December and a decline in global risk appetite, the USD/JPY pair is rising.
Goldman Sachs believes that US investor demand for Japanese securities will remain high, as their share in portfolios is low compared to the Abenomics era. Moreover, investors continue to prioritize diversification strategies. At the same time, the bank notes that the Nikkei 225 has entered an overbought area, and consolidation cannot be ruled out.
Monthly Nikkei 225 Trading Plan
The S&P 500 remains the flagship of the global stock market, and the pullback in the broad stock index is dampening global risk appetite. At the same time, the outlook for Japanese securities looks better. After reaching the previous target of 52,600, the Nikkei 225 exhibited a pullback. This provides an opportunity to open long positions with the targets of 55,100 and 58,000.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of NI225 in real time mode
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