The Japanese stock market recently hit a new record. The Tokyo Stock Exchange ( Topix ) surged to a historic high at the end of the year, breaking the peak record set during the bubble economy era 36 years ago. The index increased by 22% last year, marking the third consecutive year of positive annual growth.

Analysis by the strategy team of a major asset management institution pointed out an important signal behind this rally: the buying foundation of the Japanese stock market is continuously expanding. Even more interesting is that the speed of valuation recovery is accelerating. No longer are only AI concept stocks popular like last year; now banks and insurance companies are starting to catch up, and sectors like construction and real estate, which rely on domestic demand, are also rising. Even small-cap stocks are attracting attention, indicating that market attractiveness is truly increasing.

Data shows more clearly — small-cap stocks rose by 27% this year, mid-cap stocks by 26%, marking the first time since 2022 that these outperformed large-cap stocks, which increased by 21%. From a single standout to a bloom of sectors, this rotation rhythm reflects subtle changes in market expectations for the economy and corporate prospects.