The Nikkei 2026 has had a crazy start! Takamichi Hayashi's victory ignites the market, and Japan dominates the top three spots on the global bull market list.

Under the economic growth policies of Prime Minister Sanae Takai, the Japanese stock market has had an impressive start in 2026, with sectors such as chips and defense leading the developed markets. So far this year, the top three performers in the MSCI Global Index are all Japanese companies: chip manufacturer Kaima Holdings saw a nearly 120% increase, leading the list; defense companies Kawasaki Heavy Industries and chip materials company JX Advanced Metals followed closely behind with increases of over 60%. This current surge that leads the global market is a reflection of the new highs being reached by the Japanese stock indexes. Following the historic victory of the Liberal Democratic Party, to which Sanae Takai belongs, in the elections last Sunday, both the Nikkei 225 and TOPIX indexes have hit new all-time highs this week. Market expectations are that the new government under Sanae Takai will increase fiscal expansion and stabilize the political landscape. Following the elections, the Nikkei Index has risen by over 5%, significantly outperforming the S&P 500's 1.4% decline during the same period. Sectors such as technology, defense, energy, and infrastructure have become the biggest winners, with investors betting on the government increasing its support for "strategic industries." Russell Shor, senior market analyst at Tradu trading platform, stated, "At the beginning of 2026, Japan has become one of the most attractive investment destinations globally." Shor noted that this current rise is due to a clear political landscape, expected fiscal stimulus, attractive valuations, and improved corporate prospects, stating that the market welcomes Sanae Takai's governing authority and new round of policy support. Goldman Sachs strategists also upgraded their rating on the Japanese stock market to overweight in a report on Friday, optimistic about Japan entering a period of political stability. Sectors such as defense, critical resources, shipbuilding, energy, and those benefiting from America's reindustrialization policy will receive policy dividends. As the second best performer in the MSCI Global Index this year, Kawasaki Heavy Industries surged by 20% last week alone, benefiting from better-than-expected financial reports and market expectations that Sanae Takai will capitalize on her election victory to relax Japan's restrictions on military capabilities. IHI Corp., another in the same industry, has also seen an increase of over 50% this year, ranking in the top ten of the MSCI Index. Kaima, which has been leading the index since 2025, surged by 15% in intraday trading on Friday after raising its full-year performance expectations. Benefitting from the explosive demand for storage chips in the AI industry and the skyrocketing chip prices, this NAND flash memory manufacturer has seen its cumulative increase over the past 12 months exceed 10 times. JX Advanced Metals, which went public in Tokyo in early 2025, has benefited from the rise in global metal prices and the surge in AI demand. The same logic has also driven up Sumitomo Metal Mining Co., with an increase of about 60% this year. However, this historic surge in the Japanese stock market has also started to raise concerns. Shor from Tradu warned, "The positive factors have been largely priced in, and risks are accumulating." "The market's tolerance for disappointment is narrowing, and technical indicators show that the Nikkei 225 is currently in overbought territory."