Why Japanese Stocks Could Keep Rallying

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Feb 24, 2026

Bruce Kirk, Chief Japan Equity Strategist at Goldman Sachs Research, offers a concise take on how Japan’s snap election may reshape market risk and investor demand. He breaks down why supermajorities historically expanded P/E multiples, the role of policy clarity and corporate governance progress, and how foreign allocation gaps could fuel further inflows.

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INSIGHT

Supermajority Wins Drive Short Term Multiple Expansion

A supermajority win historically triggers a strong market rally and multiple expansion.
In 2005, 2012 and 2014 LDP supermajorities led to ~20% gains in three months and a ~3-point peak multiple expansion before settling to ~2 points.

INSIGHT

Political Stability Lowers Risk Premium And Attracts Flows

Political stability from a large electoral mandate reduces market risk premium and attracts foreign investors.
Longer expected tenure for a prime minister and policy continuity are the channels that lift valuations.

ADVICE

Monitor Early Policy Signals Around Defense And US Ties

Watch early policy clarity on defense, economic security, and US relations as triggers for investor confidence.
The upcoming March 19 summit between Prime Minister Takechi and President Trump will provide important directional clarity.

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Goldman Sachs Research’s Bruce Kirk discusses the implications of Japan’s recent snap election and the implications for the equity market and foreign investors.

Date of recording: February 19, 2026.

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