Goldman Sachs raises Topix target to 4,400

In a research note published Monday, Goldman Sachs raised its 12-month Topix target to 4,400 and set a target forward price-to-earnings multiple of 17.5x, estimating more than 10% upside from current levels.

The firm revised its fiscal 2026 earnings-per-share growth estimate for Japanese companies to 11% from 7%. It projects a further 11% increase the following year and 9% in fiscal 2028.

Goldman highlighted more than $100 billion of foreign inflows into Topix-listed stocks since April 2025. The bank also reported total shareholder returns of 43 trillion yen in fiscal 2025, a figure that reflects higher dividends and a surge in share buybacks.

Earlier in the year, tensions in the Middle East reduced Topix’s forward multiple to about 15x. The 17.5x multiple used in Goldman’s target reflects the bank’s valuation assumption based on its earnings revisions and recent capital flows.

The research note said corporate governance changes, pressure from activist investors and guidance from the Tokyo Stock Exchange have encouraged companies to return more cash to shareholders through dividends and buybacks.

Goldman wrote that its earnings revisions, the valuation assumption and sustained foreign demand form the basis for the 4,400 target.

Market participants will watch coming earnings reports and the scale of future buybacks for confirmation of recent trends, and they will monitor whether foreign inflows continue at the pace observed since April 2025.

The research note included the bank’s forecasts and valuation assumptions; it did not provide a specific timetable for future inflows or company-level buyback plans.