Review of Japanese bank stocks in July: Benefiting from central bank policies and the pullback of AI stocks, strong performance (Nomura)

2026-07-11·ima-daily5min-0711-12-a8171942b5

Street Signal | Review of Japanese bank stocks in July: Benefiting from central bank policies and the pullback of AI stocks, strong performance (Nomura)

The July Japanese banking industry monthly report released by Nomura Securities shows that bank stocks performed well, mainly due to the Bank of Japan’s (BOJ) monetary policy normalization expectations and profit-taking in AI-related stocks, with funds rotating into the value sector.

The report lists data from major banks, such as Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG), Mizuho Financial Group, etc., and their stock prices have all risen sharply, outperforming the TOPIX index.

Specifically, the Bank of Japan ended negative interest rates and began raising interest rates, which significantly improved banks' net interest margin prospects. At the same time, AI concept stocks that had experienced huge gains in the early stage experienced corrections, driving funds to find valuation depressions.

The defensive and low valuation attributes of bank stocks gained favor. The market is actively pricing in expectations for improvement in bank earnings, but future gains will need to rely on further increases in real interest rates and growth in loan volumes.

One sentence conclusion: Japanese bank stocks are experiencing "rising interest rates + capital rotation" Davis Double Click, which is a more certain investment direction in the current macro environment.

Positive/negative: Positive for large Japanese banks such as Mitsubishi UFJ Financial Group (8306), Sumitomo Mitsui Financial Group (8316), Mizuho Financial Group (8411). The market has begun to price in expectations of interest rate hikes, but the magnitude and sustainability of the rise in interest rates still leave room for further increases. Catalysts:

1) The Bank of Japan’s subsequent interest rate resolution and monetary policy report;

2) The trend of Japanese government bond yields (especially the 10-year term);

3) The latest quarterly financial reports released by banks, verifying the improvement in net interest margins.

Full text

Review of Japanese bank stocks in July: Benefiting from central bank policies and the pullback of AI stocks, strong performance (Nomura)

The July Japanese banking industry monthly report released by Nomura Securities shows that bank stocks performed well, mainly due to the Bank of Japan’s (BOJ) monetary policy normalization expectations and profit-taking in AI-related stocks, with funds rotating into the value sector. The report lists data from major banks, such as Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG), Mizuho Financial Group, etc., and their stock prices have all risen sharply, outperforming the TOPIX index. Specifically, the Bank of Japan ended negative interest rates and began raising interest rates, which significantly improved banks' net interest margin prospects. At the same time, AI concept stocks that had experienced huge gains in the early stage experienced corrections, driving funds to find valuation depressions. The defensive and low valuation attributes of bank stocks gained favor. The market is actively pricing in expectations for improvement in bank earnings, but future gains will need to rely on further increases in real interest rates and growth in loan volumes. One sentence conclusion: Japanese bank stocks are experiencing "rising interest rates + capital rotation" Davis Double Click, which is a more certain investment direction in the current macro environment. Positive/negative: Positive for large Japanese banks such as Mitsubishi UFJ Financial Group (8306), Sumitomo Mitsui Financial Group (8316), Mizuho Financial Group (8411). The market has begun to price in expectations of interest rate hikes, but the magnitude and sustainability of the rise in interest rates still leave room for further increases. Catalysts: 1) The Bank of Japan’s subsequent interest rate resolution and monetary policy report; 2) The trend of Japanese government bond yields (especially the 10-year term); 3) The latest quarterly financial reports released by banks, verifying the improvement in net interest margins.