Japan’s Regime Shift Gains Earnings Momentum

Templeton Global Investments’ 2026 outlook argues that Japan’s escape from deflation and accelerating corporate reform are laying the foundation for sustained equity outperformance 

The return of sustainable inflation and pro-growth Takaichi policies are normalising nominal GDP growth, supporting multiyear EPS expansion.

• Broadening corporate reforms—focused on ROE improvement, capital discipline and portfolio restructuring—are driving structural profitability gains.

• Persistent valuation discounts to global peers leave room for P/E rerating as global investors remain underweight Japan.

Is this a cyclical rebound—or a generational reset for corporate Japan? The full outlook assesses the durability of the transformation.