On February 8 this year, Japan’s Liberal Democratic Party (LDP) secured the largest victory in postwar history, capturing a two-thirds supermajority. The victory was so overwhelming that the party ran out of candidates, abandoning 14 seats to the opposition.

What’s even wilder is that just 18 months before, a massive slush-fund corruption scandal had forced two consecutive LDP prime ministers to resign. And in the last election, the party lost its grip on both houses of parliament. In simple terms, the LDP was more hated than any other time in modern history.

Turning a catastrophic political collapse into the biggest victory in postwar history wasn’t because the LDP did some crazy 4D chess moves. It happened because the opposition is so hopelessly incompetent that Japan remains, in all but name, a one-party state…

In fact, since it was formed in 1955, the LDP has spent less than five years out of power.

Parties in countries like China has held uninterrupted power using censorship, prisons, and outlawing rivals. Japan has achieved the same political monopoly under democratic freedom, with a free press, publicly funded opponents, and clean elections.

How are they doing it?

1955: How A Democracy Became a One-Party State

How does an open democracy where anyone can run for office become a permanent one-party state?

To answer that, I picked up constitutional historian Mitsuru Kurayama’s “A Historical Examination: Why Japan’s Opposition Is Hopeless”, which is where much of the facts in this article comes from.

His argument starts from a definition:

“By definition, a political party exists to seize power. […] Yet Japan’s opposition lacks even the appetite to lead, remaining perpetually inept across its entire history.”

However, this wasn’t always the case.

Back in 1955, the main opposition, the Japan Socialist Party (JSP) was guaranteed to win. Riding on an anti-war and anti-poverty platform, they scared the US and Japanese business elites so badly that Japan’s conservative parties, despite having almost nothing in common, merged to create the LDP, which overnight became Japan’s biggest party. The US even pumped covert money into conservative pockets to sustain this unnatural alliance (The New York Times, 1994).

From then on, instead of fighting to retake power, JSP’s goal turned into a fake war to protect Japan’s anti-war constitution. Changing the constitution takes a two-thirds majority, which meant the socialists only needed 34% of parliament to block the LDP.

This was the ultimate cushy gig. JSP could play the heroic defenders of peace forever, receive guaranteed government payouts, without ever taking on the responsibility of ruling.

The JSP spent the next 34 years aiming at 34%…

1989: The Day the Opposition Woke Up

On July 23, 1989, the Japanese left woke up.

Takako Doi’s JSP faced a severely mismanaged LDP, with top members newly being bribed with pre-IPO Recruit shares (now owner of Indeed and Glassdoor). To make matters worse, the LDP was in the midst of forcing through Japan's first, wildly unpopular 3% sales tax.

Voters revolted, and the LDP got its worst result ever.

The JSP was still far from a governing majority, but Doi had managed to convince voters that they were a real alternative. She cemented her victory with three words every Japanese person over fifty can still quote: “The mountain moved” (山が動いた).

The mountain had indeed moved, but the ground beneath them was about to collapse…

Within months of her victory, the biggest bubble in Japanese history burst, starting the “lost decades”. This economic collapse broke the LDP’s 38-year monopoly on power and Doi became Speaker of the House in 1993.

However, the new coalition was so crippled by infighting that in just one year, her party cut a desperate deal with the LDP where Tomiichi Murayama was installed as prime minister. As soon as Murayama came to power, he abandoned every position the JSP had fought for: He formally recognized the Japanese military structure that his supporters considered illegal and backed the US-Japan security pact they had protested for generations.

Now effectively a diluted copy of the LDP, the JSP collapsed in slow motion. By June 1994, the LDP had taken back power, just 11 months after the JSP had won, and in 2003, Takako Doi even lost her own district.

2009: The Opposition Strikes Back

At this point, the old socialist JSP was basically dead. However, something far more dangerous rose out of the ashes: The Democratic Party of Japan (DPJ). This was a coalition mixing former socialists with moderate reformers. Most importantly, they brought in Ichirō Ozawa, a ruthless former LDP kingmaker who knew every dirty trick in the ruling party’s playbook.

They quickly managed to gain momentum by attacking LDP over stagnant wages, rising inequality, and the 2007 scandal where the government had lost 50 million pension records. Meanwhile, Ozawa built up ground operations to fight the LDP in rural areas, transforming the DPJ from a protest party into a genuine government-in-waiting.

However, in May 2009, just three months before the election, Ozawa was forced to resign over a 36-million-yen fundraising scandal. Party co-founder Yukio Hatoyama won the emergency vote to replace him and miraculously managed to recover the party’s momentum by pinching himself as an uncorrupted fresh start. In the August election, the DPJ took 308 of 480 seats, and became the first opposition party in Japan’s democratic history to win an outright majority.

I remember seeing the victory on TV as a sign that Japan had changed; that we could finally throw the corrupt politicians out and get something better.

I should have known better…

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Listen, Japan is amazing. It’s the land of the rising sun, unparalleled service, and convenience stores that will ruin your life back home. But contrary to your gaijin beliefs, not every city is a neon-soaked cyberpunk dreamland. Some cities are just concrete, car centric hellscapes peppered with pachinko parlors and chain restaurants…

So, channel your i…

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Every morning, my aunt in Kumamoto sends me a Facebook Reel. Sometimes it’s cute animals, but more and more, it’s things like a foreigner doing something rude on a train, a shop sign in a language she can’t read, a tourist climbing something she definitely shouldn’t. You get the theme.

No shade to my cute aunt, but she’s 71, and never had a problem with …

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It’s as if Toshiba angered the Greek gods and caught a reverse Midas touch…Instead of gold, everything they touched turned to ash. They championed HD DVD right as the entire planet switched to Blu-ray. Then they paid an insanely criticized premium to buy the US nuclear firm Westinghouse in 2006, betting their entire fortunes on a global nuclear renaissa…

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Today, , my dear friend and mastermind behind the institutional-grade equity research over at Asian Century Stocks, joins me to break down South Korea’s massive reforms, the brutal reality of Asian value traps, and why the global AI race is going to end in total commoditization.

(Disclaimer: Any stocks or investments discussed are not financial advice; this conversation is strictly for entertainment purposes only.)

1. The Five-Year Bet: Which Asian Country Gets Your Entire Net Worth?

Michael Fritzell: South Korea. They are actively copying the corporate reform playbook that the Tokyo Stock Exchange pioneered. While everyone is staring at the major indices, I see massive, underappreciated value across the small-cap space, a universe of two to three thousand stocks that are significantly cheaper than anything you will find in other developed markets.

The real catalyst is the mid-2025 introduction of fiduciary duty for directors. Directors will finally be legally responsible for all shareholders’ interests, not just the controlling family blocks. This makes minority abuse and shady related-party transactions incredibly difficult to pull off. Shareholder activism is blossoming early here, meaning minority investors can simply piggyback on campaigns by powerhouse firms like Oasis and Dalton to unlock deep value.

However, do not touch the major index. I would never buy the Kospi right here. Its entire rally has been artificially driven by AI CapEx and memory chip stocks experiencing a massive squeeze in DRAM prices, which is completely unsustainable over the long term.

2. The Dumbest Value Trap Western Investors Fall For in Asia

Michael Fritzell: Investors consistently fail to look at the actual character of the people running the business. The hard truth about investing in Asia, or honestly anywhere, is that you cannot rely on the legal system to protect you. At the end of the day, if these people want to cheat you, they can.

You have to ignore the spreadsheet and audit their public track record instead. Look at their historical capital allocation, their corporate structure complexity, and whether they have a habit of diluting shareholders or routing money into sister companies.

A stock can look flawless on paper with 60% to 70% of its market cap sitting entirely in cash. But if the founder has a decades-long track record of refusing to pay out a single cent, that cash position is completely irrelevant, it is a value trap. You are stuck waiting for a generational shift, like a son taking over the business and finally launching buybacks or dividends.

3. Singapore vs. Tokyo: Why Do Expats Choose the Lion City?

Michael Fritzell: Singapore wins purely on the perception that the hurdles to entry are lower, backed by world-class government marketing. The Singaporean government literally sponsored part of the production for Crazy Rich Asians because they understand how to build a global brand name. It just feels easier to integrate there initially.

Objectively, Tokyo is one of the coolest cities on earth, and Japan has an incredible, relaxed vibe where people seem genuinely more content. If Japan offered a legitimate golden visa and competitive tax benefits for expats, people like me would flock to Tokyo over Singapore in a heartbeat.

4. Will Japan’s GDP Shrink or Grow Over the Next Decade?

Michael Fritzell: Japan is fundamentally losing its structural competitiveness. Giants like Toyota and Daikin used to completely dominate export markets in developing countries, but they are now facing brutal competition from private Chinese companies led by young, hungry, 40-something managers.

Because of this, I expect Japan to suffer continued market share loss and a relative decline in GDP per capita. To reverse this, Japan desperately needs aggressive entrepreneurship from younger people who want to get rich, rather than just coasting on legacy firms formed in the 1950s and 60s like Sony and Casio. We need to see a Japanese equivalent of Spotify pop up, but those examples are incredibly rare right now.

5. The Best Political Leader in Asian History

Michael Fritzell: Deng Xiaoping. He did an immeasurable service to the Chinese population by dragging the country out of an incredibly backward, painful state during the 1960s. People frequently try to rewrite history, but the reality of that era was exceptionally rough.

That said, history hasn’t ended yet. China remains a communist country, and under the current framework, we still do not know where the economy will ultimately end up.

6. Can the Rest of Asia Compete in the Global AI Race?

Michael Fritzell: The software side of large language models is going to be completely commoditized. China has the capital and resources to copy and keep pace with American models, but outside of the US and China, no one else is going to build a standalone giant.

The structural issue with AI models is a total lack of pricing power because there are too many substitutes. There is very little true differentiation between Gemini, ChatGPT, or DeepSeek. Eventually, the hype will fade, the technology will commoditize, and the rest of the world will simply default to the cheapest, most accessible models provided by Google or Chinese tech giants.

7. Does Europe Have an Economic Future?

Michael Fritzell: Europe will be fine; the absolute doom loop narrative is completely off-base. Europe’s manufacturing base was crushed over the last 30 years because Western multinationals outsourced their factories to China, allowing their technological know-how to be copied. Now, that tech spillover is grinding to a halt as foreign direct investment into China plummets.

Meanwhile, places like the Nordic region maintain incredibly vibrant entrepreneurship and exceptional living standards. The current financial media is dominated by social-media-driven culture wars and a hyper-hot US stock market narrative. Back in 2010, the narrative was that the US was dying under a mountain of debt. Narratives shift rapidly, and the current misperceptions about Europe will disappear over time.

8. Are Chinese Stocks Uninvestable or the Bargain of the Decade?

Michael Fritzell: Over the long term, you simply should not invest in countries that refuse to protect minority shareholders. In China, the penalties for cheating foreign investors are virtually nonexistent. The Chinese internet index (KWEB) has been entirely flat for 10 years during the greatest Nasdaq tech bull market in history, and the CSI 300 is flat over a 35-year horizon.

This isn’t because the underlying companies are bad, they are actually performing very well operationally. It is the direct result of continuous share dilution and the atrocious treatment of minorities. Aside from massive, shareholder-friendly exceptions like Tencent or NetEase, foreign capital is heavily exposed. The domestic A-share market will survive because locals need an inflation hedge to protect their savings, but for foreigners, it remains highly hazardous.

9. The One Asian Market to Avoid Right Now

Michael Fritzell: India. Prime Minister Modi has done fantastic things for the country’s infrastructure and entrepreneurship, but the valuation multiples make absolutely no sense. You have standard Indian consumer stocks trading at 40, 50, or 60 times PE.

These businesses are not managed any better than equivalent companies in the Philippines or Indonesia, yet in Indonesia, you are only paying 8 times PE for the exact same fundamental quality. When a market’s story becomes that extreme, it is time to take the other side of the trade.

10. Asia’s Finest: The Most Important Business Leader in the Region

Michael Fritzell: Morris Chang, the founder of TSMC. Building a $2 trillion powerhouse out of Taiwan, a small island of just 22 million people, is one of the most remarkable feats in business history. Not even mainland China has successfully built a trillion-dollar company.

Chang completely revolutionized global tech by pioneering the independent foundry model. Instead of building closed ecosystems like Intel, TSMC acted as a neutral manufacturing partner for fabless chip designers worldwide. This strategy unlocked massive scale, generated immense returns on equity, and allowed them to out-invest the entire world in R&D. Even if they face future headwinds, the modern technological world entirely exists because of Morris Chang’s blueprint.

It is June 2026, and the financial laws of gravity are completely breaking down across two different hemispheres.

The US stock market has reached valuations that defy all historical sanity. The S&P 500 is currently sitting at a massive 41.6 on the Shiller P/E. As a refresher, this metric smooths out the normal ups and downs of the economy by looking at ten years of profits instead of just one. In plain English, a 41.6 ratio means investors are paying nearly $42 today for every $1 of profit those companies averaged over the last decade.

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To understand how insane that is, you have to look at 140 years of market data. The current valuation is more than twice the long-run historical average of 17.3. We have officially blown past the infamous 1929 peak of 32.6, which preceded the Great Depression. We even crushed the post-pandemic stimulus peak of 38.6. There is only one single moment in the entire history of American capitalism when stocks were more expensive than they are today. That was December 1999, right at the peak of the dot-com bubble, when the Shiller P/E hit 44.19.

Meanwhile, over in Japan, I am seeing a totally different milestone. The Nikkei 225 just broke 65,000 and hit an intraday all-time high of 66,428.81 in late May 2026. Japan spent over three decades trapped in the shadow of its own legendary crash. But unlike the current American market, Japan’s rally is not built on speculative AI euphoria. Japan’s CAPE ratio (Shiller P/E) is sitting at a quite reasonable 29.38. That is elevated globally, but it is nothing like the hallucinatory valuations Japan saw during its 1989 ultra-bubble, when their CAPE approached 100.

The American AI bubble is delusional

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Prime Minister Sanae Takaichi secured a massive supermajority in the February 2026 elections by reading the room.

Her winning message?

Revitalize the economy, strengthen national defense, and above all, enforce a hard cap on immigration.

This bears an eerie resemblance to "Sakoku 2.0", a term popularized during the Covid-19 pandemic referencing Japan's historical era of absolute national isolation.

This policy is fiercely contested globally. For one of the most rapidly shrinking countries on earth, embracing immigration seems essential for economic survival.

But what do the Japanese people think?

So far, they seem to love it!

This might sound strange in a country where basically everyone is aware that they will face a catastrophic labor shortage of 11 million workers by 2040.

People in favor of restricting immigration in Japan argue that Japan will survive this demographic collapse without mass immigration by simply automate everything. In fact, the government themselves claims Japan will capture 30 percent of the global market for physical AI by 2040, seamlessly deploying robots into nursing homes, restaurants, farms and construction sites.

I find this techno-utopian fantasy completely unrealistic.

Sure, Japan boasts incredible hardware engineering, but the country is notoriously terrible at software adoption and administrative modernization. Furthermore, Japan’s robotics leadership is actively slipping. The industry is shifting from rigid industrial arms to general-purpose robots powered by advanced AI, and Japan currently trails both the United States and China in key research and component production. We are not going to see 11 million humanoid robots walking the streets of Tokyo and Osaka to save the economy.

But maybe an economic fallout for curbing immigration is a price worth paying?

Many of you probably agree with Japan's hardline stance on immigration. Watching the disruption caused by mass migration across the West, Japan appears to be actively avoiding the same pitfalls. I see this view all the time on X and in my own comment section, and frankly, I agree there is merit to tightening the borders.

But a strict zero-immigration policy collides with one terrifying reality: No country in history has successfully reversed a falling fertility rate, and Japan shows zero signs of breaking that trend. Without immigration, a rapidly shrinking population is a mathematical certainty.

This leads to two massive issues for Japan:

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First, Japan’s insane national debt and its failing public pension system.

This is the structural elephant in the room. Japan’s dependency ratio (the number of retirees aged 65 and above compared to working-age people) is rising sharply. It will hit 60% by the early 2030s and a staggering 80% before 2050. You have a rapidly shrinking pool of workers funding a massive, aging cohort.

Without a massive influx of immigrant tax money to prop up the system, the government is executing a strategy of managed financial retreat. The state has already introduced a “macroeconomic slide” formula. This mechanism automatically keeps pension increases below wage growth and inflation, effectively cutting benefits over time. By 2040, the average pension level will be slashed by approximately 20 percent.

Because of this, we are staring down the barrel of widespread elderly poverty. Elderly households already constitute the largest category of public assistance recipients in the country. To stabilize national finances without immigrants, some academic models suggest the government would need to push the consumption tax to an impossible 40-50%. Since that is political suicide, the state will likely monetize the debt. This will trigger inflation that further erodes the purchasing power of fixed-income retirees. The government will simply force the elderly to work well into their 70s out of sheer survival necessity.

Second, a massive emptying out of Japan.

We are going to witness the death of the Japanese countryside.

According to the influential Masuda Report, without immigration, nearly half of all municipalities in Japan are at risk of vanishing entirely by 2040. By 2050, roughly 20% of regional areas could lose all of their inhabitants. Places like Akita, Aomori, and Kochi will see their populations plummet by over 30%.

As local tax bases evaporate, regional governments will go bankrupt. They will lose the ability to maintain roads, water systems, and power grids. The only rational response for young people is to pack up and abandon these areas.

If there is one silver lining, if you can call it that, it is that major cities in Japan will see a “population boom”, as the young people are abandoning their rural communities. The population will condense into a few highly efficient mega-cities like Tokyo and a handful of regional survivor hubs.

There is hope

However, some smaller cities are already countering this trend using the "compact city" model, with Toyama City serving as a highly successful prototype.

These survivor cities will be dense and hyper-concentrated around major public transit stations. The government will deliberately pull funding from sprawling suburbs and force residents into these walkable urban cores to drastically reduce the cost of delivering public services.

Is it a great solution? No, but it might be the only way for smaller cities in Japan to survive.

How will Japanese companies survive the labor shortage?

In the corporate world, I think I have a bit of a unique take now with the AI being so prevalent.

The return of the salaryman

I think we’ll see a resurgence of the traditional Japanese “salaryman,” heavily augmented by AI.

Artificial intelligence currently replaces specific tasks rather than entire jobs. The software is jagged. It excels at some things and fails spectacularly at others. This means companies cannot just fire their accounting departments and buy an algorithm.

Instead, large corporations will hire human generalists, something Japan Inc loves to do already. Their entire job will be to supervise flawed AI outputs, plug operational gaps, and physically intervene when the software inevitably breaks. Because these workers accumulate deep, firm-specific knowledge about how their particular company’s AI systems operate, they will become highly valuable assets. Japan’s cultural comfort with lifetime employment makes it uniquely suited for this specific kind of generalist labor market.

There will be no silver bullet for the workforce deficit

But augmenting office workers only solves part of the equation. What about the millions of missing physical laborers, service workers, and rural producers?

Take agriculture.

The average Japanese farmer is already pushing 70 years old. Without the controversial foreign trainee programs that previously funneled cheap labor into rural areas, domestic food production is going to crater. We will likely see a liberalization of farming laws which will result in the death of the small family farm, replaced by automated corporate agribusinesses, but overall, Japan’s food self-sufficiency will plummet.

Zombie companies will be replaced be monopolies

In the broader economy, the brutal truth is that thousands of companies simply won’t survive, but this might not be such a bad thing at first glance.

Japan is notorious for its zombie companies, unproductive, inefficient small-to-medium enterprises kept on life support for decades by zero-interest loans and government subsidies. Without an underclass of cheap, imported labor to exploit, these businesses will go bankrupt en masse.

This will lead to an era of ruthless hyper-consolidation. As the zombies die, the surviving workforce will be absorbed by a few large, capital-rich corporations.

On the bright side, because these mega-corps will be fighting to the death over a shrinking pool of available workers, we are going to see a massive spike in wages. The era of stagnant Japanese paychecks will end out of sheer demographic desperation.

Paradoxically, this hyper-consolidation means Japan’s stock market could actually boom. As the Nikkei giants absorb the market share of thousands of dead small businesses, corporate profits at the top will concentrate. We are looking at a starkly two-tiered economy: Aggregate GDP will shrink, but the remaining mega-corps will become wildly profitable monopolies.

But this wage growth and market concentration triggers a debt bomb. Rising wages mean sticky inflation. To fight that inflation, the Bank of Japan will have to raise interest rates. And when interest rates rise in a country with a national debt over 250% of its GDP, the government’s debt servicing costs will go fully parabolic.

The surviving monopolies will be the only ones able to afford to invest in the AI, automation, and higher wages required to keep operating. For the everyday consumer, this means the death of hyper-convenience. 24/7 convenience stores will slash their hours. Next-day delivery will become a premium luxury.

The inconvenient truth is that without migration, companies won’t magically replace 11 million workers; they will simply force consumers to accept less, while squeezing maximum productivity out of their remaining, AI-augmented human generalists.

Ultimately

If Japan actually locks the door on immigration, the result is a fascinating contradiction: the stock market will boom while the actual economy shrinks. As millions of workers vanish, thousands of small businesses will simply die off, leaving the surviving mega-corporations to scoop up all their customers and become wildly profitable.

But the stock market’s win is the everyday consumer's loss. For the average Japanese citizen, the legendary era of cheap, flawless convenience is over. They are going to wake up in a drastically more expensive country where basic services cost a premium, everything closes early, and the bill for a shrinking nation is paid entirely out of their own pockets.

Conclusion

If the Takaichi administration actually means what it says about immigration, they are making a massive trade-off. They are choosing social cohesion over economic growth. They are willing to accept a smaller economy, strained pensions, and dead rural towns as the price for keeping their core cities safe, clean, and culturally familiar.

I think this is the ultimate macroeconomic experiment of the 21st century.

Japan is proving that a modern society can look at the social fragmentation happening abroad and simply say no. They are choosing to manage their own decline, becoming smaller, older, and poorer on paper, to protect their way of life. The transition will be brutal, defined by vanishing services, soaring taxes, and empty neighborhoods. Ultimately, the everyday citizen will have to look around at this shrinking, expensive new reality and ask themselves a very uncomfortable question:

Sources:

• National Institute of Population and Social Security Research (IPSS) - Population Projections for Japan: This report outlines the official demographic forecasts, projecting a 30% population decrease and an elderly population of around 40% by 2070.

  • Link: https://www.ipss.go.jp/pp-zenkoku/j/zenkoku2023/pp2023e_Summary.pdf

• Immigration Services Agency of Japan - Statistics on Foreign Residents: These official government press releases contain the data showing that the number of foreign residents recently surpassed 4 million, largely driven by new worker visa programs.

  • Link: https://www.moj.go.jp/isa/publications/press/13_00062.html

• OECD - Recruiting Immigrant Workers: Japan 2024: This comprehensive international review examines how Japan has altered its long-standing migration policies to recruit foreign workers in response to severe, widespread labor shortages.

  • Link: https://www.oecd.org/en/publications/recruiting-immigrant-workers-japan-2024_0e5a10e3-en.html

• Japan Institute for Labour Policy and Training (JILPT): This government-affiliated agency provides extensive English-language research reports detailing Japan’s acute labor shortages and the emerging impact of AI on domestic employment practices.

  • Link: https://www.jil.go.jp/english/

• Recruit Works Institute - Future Predictions 2040 in Japan: This report details the demographic simulation predicting a structural labor shortage of 11 million workers across Japan by 2040.

  • Link: https://www.works-i.com/english/item/FuturePredictions2040_JP.pdf

• Global Market Insights / METI - Physical AI Strategy: Outlines the Japanese government’s strategic target to capture 30 percent of the global market for physical AI and robotics by 2040 to offset the workforce deficit.

  • Link: https://www.indexbox.io/blog/japan-aims-for-30-of-global-physical-ai-market-by-2040/

• Japan Policy Council / Population Strategy Council (Masuda Report): These reports provide the demographic projections showing that nearly half of all municipalities in Japan are at risk of vanishing entirely due to population collapse.

  • Link: https://isvd.or.jp/en/columns/local-government-extinction-structure

• World Bank - Toyama City Compact City Case Study: A comprehensive international review of Toyama City’s successful urban redesign to adapt to a shrinking and aging population using the compact city model.

  • Link: https://documents1.worldbank.org/curated/en/113011604996380368/pdf/Toyama-City-Compact-City-Development.pdf

• Mitsubishi Research Institute & Ministry of Finance - Pension Projections: These analyses provide economic estimates on Japan’s dependency ratio, the impact of the macroeconomic slide, and the projected reductions in public pension benefits.

  • Link: https://www.mri.co.jp/en/knowledge/article/202409_1.html

The numbers are so large they almost lose their meaning. We are looking at a nominal gross domestic product of roughly 665 trillion yen as of 2025, stacked against a gross government debt of 1,342 trillion yen. Depending on the metric, the government debt-to-GDP ratio sits between 230% and a …

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It takes a profound lack of self-awareness for a politician to govern over three decades of wage stagnation and then act shocked when young people stop spending money.

During a recent Diet session, Finance Minister Satsuki Katayama clutched her pearls over a newly coined phenomenon sweeping the nation: NISA Poverty (NISA貧乏).

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I was recently scrolling through videos of China’s newest automotive assembly lines, and honestly, it’s scary. I was looking at so-called “dark factories”, facilities like those operated by Xiaomi and BYD. They are so thoroughly automated they can operate in the dark, with basically zero human interaction, and a completed car rolls off the line every 10…

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Japan Inc. is facing a demographic time bomb.

The scale of what is happening to Japan’s corporate landscape is truly terrifying:

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Japan is frequently associated with lifetime employment, strict corporate hierarchies, and decades of stagnant wages. However, there are companies that definitely brea…

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My recent report on Takashi Kotegawa,

,became one of my most shared articles ever.

In this video, I go deeper into the technical side of his “25-Day Moving Average Divergence” strategy that I outlined in the text. I break down the specific charts from the 2005 crash and the 2008 Lehman shock to show you exactly where he bought when everyone else was selling.

I am trying something new today. I will put a claim I’ve heard time and time again to the test: The AI boom is hoarding all the me…

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I have tasked myself with finding the greatest investor in Japan, and the search did not take long.

While there are others who have achieved fame in the retail space, most notably the brash and vocal CIS, there is only one undisputed god of the Japanese investing scene.

His name is Takashi Kotegawa, but the financial world knows him simply as B.N.F.

He is the man who turned his student savings of roughly 1.6 million yen into a fortune exceeding 30 billion yen ($272 million).

That’s a 1,874,900% total return!

He is the man who managed to make over 2 billion yen ($18.2 million) in 10 minutes during the most infamous trading mistake in Tokyo Stock Exchange history.

He is the man who bought a commercial building in Akihabara with cash simply because he had run out of things to do with his money.

Kotegawa grants almost no interviews. He has no social media presence. He does not sell courses. He does not want your money. He wants only to trade.

And to understand his life since he went silent in 2020, I have compiled the available traces of his career: Old 2-chan forum posts, his few media appearances from 2006, public tax records, and the analysis of the Japanese trading community.

This report is his story….

Part I: The Death of the Salaryman

To understand Kotegawa, I must first paint the picture of the Japan he emerged from.

The year was 2000. The world’s biggest bubble had burst a decade prior, and the Nikkei 225 was a graveyard of optimism. The great Japanese dream of the salaryman, a stable, respectable career with lifetime employment that had underpinned the social contract since 1945, was dying. Japan was sliding into the deflationary abyss that would come to define its “Lost Decades.”

For the generation coming of age in the late 1990s, the corporate ladder looked less like a path to security and more like a trap. The “shinjinrui” (new breed) of young Japanese were disillusioned. They saw their fathers sacrifice their lives for corporations that were now discarding them. They looked for an escape.

The Digital Big Bang

However, a quiet revolution was taking place beneath the surface of this economic stagnation. The Japanese government, desperate to revitalize the financial sector, executed the “Financial Big Bang.” A critical component of this was the liberalization of brokerage commissions in October 1999.

Before this moment, trading stocks was a rich man’s game. It was gated by high fees and telephone orders. You had to call a broker. You had to pay a significant percentage of your trade execution. It was slow. It was inefficient. It was exclusive.

Suddenly, online brokers like Matsui Securities, Rakuten Securities, and E*Trade Japan emerged. They offered low latency and, crucially, low commissions. They opened the gates of the Tokyo Stock Exchange to the general public.

It was the dawn of the “Net Trader.” Thousands of young men retreated to their bedrooms. They armed themselves with PCs and high-speed internet connections.

They were the first generation to see the market not as a mechanism for capital allocation, but as a massive multiplayer online game played for real money.

Takashi Kotegawa was one of them.

Part II: The Birth of B.N.F.

Takashi Kotegawa was born on March 5, 1978, in Ichikawa, Chiba Prefecture. His background is aggressively ordinary. This is important. No math prodigy from a prestigious academy. No heir to a financial empire. He was a student at Nihon University, an average university at best, enrolled in the Faculty of Law.

In a parallel universe, Kotegawa graduates. He passes the bar. He becomes a salaryman lawyer. He works 14-hour days for a steady paycheck. He commutes on the Tozai Line. He retires at 65.

In this universe, he found the stock market.

The year was 2000. Kotegawa was 21 years old. He had saved approximately 1.6 million yen (roughly $13,000 at the time) from rigorously saving money from his part-time jobs.

The Victor Niederhoffer Connection

Hooked by the relentless ad campaigns of the new internet trading era, Kotegawa entered the market just as a historic downturn began. The US Dot-com bubble had just burst, and it evaporated trillions of dollars in wealth, creating a global contagion that dragged the Nikkei down to levels not seen in nearly twenty years.

While panic selling turned the markets into a slaughterhouse, Kotegawa quietly opened his account.

Needing a handle for the internet forums where traders gathered to share ideas, he chose “B.N.F.” It was a phonetic error; he intended to use “V.N.F.” to honor Victor Niederhoffer, but because the Japanese language treats “V” and “B” almost identically, the misspelling stuck.

The choice was telling. Niederhoffer was an eccentric American squash champion and George Soros partner, but his edge was purely statistical. He believed that markets followed strict statistical rules, specifically, that if an asset price deviated too far from the average, it was mathematically bound to snap back. This approach made him one of the most successful fund managers on Wall Street.

But in 1997, the math stopped working. Niederhoffer bet heavily that the Thai market had fallen too far and had to rebound. It didn’t. In a single day, his fund was wiped out. He lost $130 million in equity, erased his clients’ savings, and was eventually forced to auction his personal art collection just to pay the bills.

Now why would a young student name himself after a man who lost it all?

I believe Kotegawa saw the distinction between the method and the execution. He adopted Niederhoffer’s core philosophy: Buying the panic dip because the math says it must bounce, but he treated the 1997 crash as the ultimate lesson in risk management: Do not trade on borrowed money!

By the time his graduation approached in 2001, the ¥1.6 million ($13,000) he had scraped together from years of part-time work had ballooned to ¥61 million (~$500,000). That represents an explosive 3,712% portfolio growth in just a single year.

He calculated that the opportunity cost of finishing school was simply too high. Every hour in a law lecture was costing him millions. So, with only a few credits remaining, he decided to drop out.

Part III: The Art of Catching Falling Knives

I have analyzed hundreds of trading strategies. Most are absolute nonsense. They are rigged to look perfect on past data just to hook gullible subscribers. Kotegawa’s is different.

It is brutally simple. It is also psychologically impossible for 99% of people to execute.

Kotegawa’s Trading Strategy

Kotegawa made his initial fortune between 2000 and 2004. These were dark years for Japanese equities. The Nikkei 225 slid from 20,000 to under 8,000.

Most retail investors try to pick bottoms based on hope. They buy a stock because it has fallen 50% and they think “it cannot go lower.”

It usually goes lower.

Kotegawa inverted this logic. He did not buy because he liked the company. He bought because the selling was emotional. He waited for the selling to reach a mathematical breaking point, measured by the 25-day Moving Average Divergence (kairi-ritsu in Japanese).

Think of the 25-day Moving Average (MA) as a rubber band. When the price pulls too far away from this average, it stretches tight. Eventually, it has to snap back.

The Sector Rules

Kotegawa knew one number didn’t fit all. A utility stock doesn’t stretch like a tech stock. Through obsessive watching, he found the “snap point” for every industry.

Based on his old posts, these were his rough rules (measured against the 25-day MA):

• Pharmaceuticals: Buy at a 5–10% drop.

• Electric Appliances: Buy at a 10–15% drop.

• Food / Retail: Buy at a 15–20% drop.

• Tech / Internet: Buy at a 20–30% drop.

• Speculative / Penny Stocks: Buy only after a 30–50% drop.

When a stock crashed past these lines, Kotegawa struck. He was catching falling knives.

But the genius wasn’t the entry; any fool can buy a crash. The genius was the exit.

As soon as the stock bounced, often just 2% or 3%, he sold. He didn’t wait for a full recovery to the moving average. He grabbed the “dead cat bounce” and got out.

He repeated these small wins thousands of times.

By the end of 2004, he had made his first billion yen (¥1.1 billion, or roughly $10 million). He had turned his starting cash into a 690x return.

Part IV: How to Make Two Billion in Ten Minutes

Every superhero has an origin story. Every trader has a defining trade.

For George Soros, it was breaking the Bank of England.

For Takashi Kotegawa, it was the Mizuho “Fat Finger” error of December 8, 2005.

This event is the reason I am writing this biography. It is the moment Kotegawa transcended from “successful day trader” to “national legend.”

The Error

The date was December 8, 2005. J-Com Co., Ltd., a recruitment service company, was listing on the “Mothers” (small-cap) board of the Tokyo Stock Exchange. It was supposed to be a routine IPO.

At 9:27 AM, a trader at Mizuho Securities received an order from a client to sell 1 share of J-Com for 610,000 yen.

The trader made a typographical error. It was a simple slip of the keyboard. He entered an order to sell 610,000 shares for 1 yen.

The computer system at the Tokyo Stock Exchange did not catch the error. There were no circuit breakers for this specific type of volume discrepancy at the time. The order went live.

To put this in perspective, J-Com only had 14,500 outstanding shares. Mizuho had just offered to sell forty-two times the entire existence of the company for less than a penny per share.

The Recognition

The stock price collapsed instantly.

Most traders stared at their screens in confusion. Was it a system glitch? Was the company bankrupt? Was it a fraud? Fear paralyzed the market.

Kotegawa did not freeze. He saw the anomaly. He did not know why it was happening, but he knew the math was impossible. He knew that 610,000 shares could not exist.

He bought.

He bought with both hands. He bought 7,100 shares.

Remember, there were only 14,500 shares in existence. Kotegawa had just purchased nearly half of the company’s float in a matter of seconds.

Other sharks began to circle. The famous Japanese day-trader CIS, Kotegawa’s friend and rival, also bought, securing about 3,300 shares.

Between them, these two kids in their bedrooms now owned the majority of a newly listed public company.

The Exit

Mizuho Securities realized the error. Panic ensued on the trading floor. They tried to cancel the order. The Tokyo Stock Exchange system did not allow the cancellation because their technology was so outdated. The order stood.

Desperate to cover the short position they had accidentally created, Mizuho began buying back the shares at any price. They had to close the hole they had dug.

The price rocketed.

Kotegawa sold. He dumped his shares into the frantic buying pressure of the very bank that had caused the crash.

By the end of the day, Kotegawa had netted a profit of approximately 2.2 billion yen (roughly $20 million).

He did this in roughly ten minutes

The Aftermath

The incident became known as the “J-Com Shock.” It cost Mizuho Securities roughly 40 billion yen. The head of the Tokyo Stock Exchange eventually resigned. It was a national scandal.

Kotegawa, however, was the face of the incident. The media dubbed him “J-Com Man.” He was 27 years old. He had made more money in ten minutes than the average Japanese worker earns in ten lifetimes.

When asked about it later, he simply said that he was “lucky” and that “anyone could have done it”.

This is false humility. Thousands of professionals saw the same screen. Only Kotegawa acted with that size and speed. He had prepared his mind for years to recognize anomalies, and when the biggest anomaly in history appeared, he did not hesitate.

Part V: The Curse of Scale

By 2008, Kotegawa’s assets had ballooned to over 21 billion yen (approx. $200 million). He was one of the wealthiest individuals in Japan, and he was still under 30.

The Problem of Scale

Success brings its own problems. When you have 100 million yen, you are a speedboat. You can enter and exit trades instantly. When you have 20 billion yen, you are an oil tanker.

Kotegawa began to move the market. If he tried to buy a small-cap stock, his own buying pressure would drive the price up, destroying his entry price. If he tried to sell, he would crash the stock.

He was forced to trade only the most liquid large-cap stocks: Softbank, Toyota, Nintendo, and the mega-banks. He had to lengthen his holding periods. He couldn’t snatch quick pennies anymore. He had to hold stocks for days.

What is so funny about his trading strategy is that he had zero interest in the actual businesses. In a rare TV interview, He admitted he had no clue what the companies he traded actually did, nor did he care about their earnings guidance. His only reality was the line on the chart.

Part VI: The Lifestyle of a Monk

Most billionaire biographies are catalogues of excess: yachts, vineyards, and private jets. Kotegawa’s list is blank.

This is the “quirk” that makes him a cult figure in Japan. In a culture that prizes humility, he is the monk of the market.

He has exactly one indulgence: A 400 million yen condo in Tokyo.

Yet, visitors (the few television crews who were allowed in around 2006) reported that the apartment was practically empty. There was no art on the walls. No designer furniture. Just the trading station with its multiple monitors.

Allegedly, he did buy his parents a Toyota Crown Majesta, the ultimate symbol of conservative Japanese success, but he doesn’t drive. He still takes the bicycle.

His biggest splurge, famously, was buying two Nintendo Wiis. One can assume he played them alone.

His diet consists almost exclusively of cup ramen and convenience store onigiri. He claims that eating a large meal makes him sleepy, which slows his reaction time. He avoids caffeine because it makes him jittery.

He famously said, “If you care about the money, you cannot make the right decisions.” He views money as a score in a video game.

Thinking about what money can buy invites emotion, and to Kotegawa, emotion is the enemy.

Part VII: The Lehman Crisis

The year 2008 was a test of fire for everyone. Kotegawa was not immune.

The Lehman Loss

In September 2008, Kotegawa made a rare misstep. He bet on the survival of Lehman Brothers. He bought the stock, assuming the US government would bail it out as they had done with Bear Stearns.

They did not. Lehman Brothers filed for bankruptcy.

Kotegawa lost approximately 700 million yen (roughly $7 million at the time).

In a rare display of emotion, he admitted to punching his computer monitors. He broke two of them. It is the only recorded instance of him losing his temper.

However, what defines him is not the loss, but the recovery.

In October 2008, right in the heart of the crisis, Kotegawa made a move that shocked the market.

He paid cash, approximately 9 billion yen, for a commercial building in Akihabara. The building was known as “Chomp Chomp Akihabara” at the time (it is now known as the AKIBA Cultures ZONE). The building was a 6-story hive of maid cafes and anime shops.

As the real estate market was collapsing, cash was king. Kotegawa, that had piles of cash finally used some to buy a distressed asset in Akihabara, the holy land of otaku culture.

It was the perfect hedge. As a fellow Otaku himself, he knew the building was undervalued. He knew he couldn’t day trade 20 billion yen forever, so he swapped volatility for rent. For ten years, he earned a massive yield that required zero mouse clicks.

By 2018, rumors suggest he sold it for 12 billion yen, capturing a 30% gain on top of the rent.

Part VIII: Where is He Now?

Since the sale of the Akihabara building, Kotegawa has largely vanished.

He appeared in the “shikiho” (Japan Company Handbook) substantial shareholder lists for a few years, popping up on the registries of companies like JVC Kenwood or Oricom. But recently, his name has become scarce.

There are rumors. Some say he fled to Singapore to escape taxes. Others claim he shifted to private equity. But that contradicts his deep attachment to his home turf.

The reality is likely simpler. As his friend and rival CIS once said: “He doesn’t trade for money. He trades because it is the only thing he knows how to do.”

He is almost certainly still in Tokyo, sitting in a different high-rise, likely worth well over 30 billion yen. He has probably switched to global macro or index futures, where his massive size doesn’t break the market.

He is a ghost. But every time the market crashes, every time there is a panic, every time the charts turn red and the world is screaming “Sell!”, I know he is there.

Appendix: The Kotegawa Archive

Profile

• Name: Takashi Kotegawa (小手川 隆)

• Handle: B.N.F (B-N-F)

• Born: March 5, 1978, Ichikawa, Chiba

• Education: Nihon University, Faculty of Law (Dropout)

• Key Asset: AKIBA Cultures ZONE (formerly Chomp Chomp Akihabara) - Sold approx 2018

Estimated Wealth Trajectory

• 2000: 1.6 Million JPY - Initial Capital from part-time jobs

• 2001: 61 Million JPY - The Bear Market Divergence Strategy begins

• 2002: 96 Million JPY - Compounding small gains

• 2003: 270 Million JPY - Market recovery begins

• 2004: 1.1 Billion JPY - First billion yen milestone

• 2005: 8.0 Billion JPY - The J-Com Shock Trade (+2.2B yen)

• 2006: 15.7 Billion JPY - Featured on TV (”Gaia no Yoake”)

• 2007: 18.5 Billion JPY - Continued growth despite volatility

• 2008: 21.8 Billion JPY - Lehman Loss (-700M), Real Estate Purchase (9B)

• 2018: ~30.0 Billion+ JPY - Sale of Akihabara building

• 2025: Unknown (Likely >30 Billion Yen)

Strategy Summary

• 25-Day Moving Average: Primary baseline for value

• Deviation Rate (Kairi): The buy signal; specific % drops trigger entry

• Volume: Confirmation of panic/capitulation

• RSI: Secondary confirmation of oversold conditions

• Sector Correlation: Buying the “Laggard” in a moving sector

Famous Trades

• J-Com (2005): The 2 billion yen windfall from the Mizuho error.

• Lehman Brothers (2008): Bought the dip just before bankruptcy. Lost ~700 million yen. Punched two monitors.

• Softbank (2005/2014): Repeatedly traded swings in Masayoshi Son’s volatile empire.

Sources

• Purple Trading. “Legends of Trading: Mysterious Trader from Japan - Takashi Kotegawa”.

• Japan Times. “Day traders fight for respect in Japan’s tough market” (Coverage of CIS and B.N.F).

• Pocket Option. “Takashi Kotegawa Review: The Legacy of a Trading Legend”.

• Binance Square. “Meet BNF — The Japanese Day Trading Legend”.

• Ultima Markets Academy. “Trading Strategy of BNF Takashi Kotegawa”.

• Wikipedia (FR). “B.N.F (Takashi Kotegawa)”.

• Reddit r/Japan & r/JapanFinance. Discussions on Takashi Kotegawa’s whereabouts and real estate holdings.

• YouTube. “Gaia no Yoake” (Dawn of Gaia) - TV Tokyo documentary featuring B.N.F (2006).

Is this a bubble?

With the Nikkei 225 closing at 53,847 and the TOPIX standing at 3,613, the ghosts of 1989 have returned to haunt Japan.

Recently, the Japanese stock market has gone hyperbolic around the hype around Prime Minister Sanae Takaichi’s “Sanaenomics,” the frenzy in semiconductor stocks, and the sheer thrill that ”Japan might be back!”

The temptation to declare the market too expensive and hoard cash is strong. After all, the psychological barrier of 50,000 has been breached, evoking memories of the asset bubble of 1989 where the Imperial Palace grounds were rumored to be worth more than California.

However, in this article, I argue that the “Bubble 2.0” narrative is fundamentally flawed. I think we are witnessing a rational re-rating driven by the end of deflation, structural corporate reform, and a geopolitical realignment that favors Japan. Unlike 1989, when investors paid 60 times earnings for 1% yields, today’s market offers a positive equity risk premium and balance sheets loaded with cash.

The Ghost of 1989

To understand where we are, we must first exorcise the ghost that haunts every conversation about Japanese equities: the 1989 bubble.

In 1989, the Nikkei 225 peaked at 38,915. At that moment, the market was trading at a Price-to-Earnings (P/E) ratio of over 60x. The earnings yield was less than 2%, while the risk-free rate (10-year JGB) was hovering around 6-7%. Investors were essentially paying for the privilege of losing money relative to bonds.

Fast forward to January 2026. The Nikkei is at 53,847. The index level is higher, yes, but the valuation multiple has collapsed. The forward P/E of the Nikkei is approximately 23.9x, and more importantly, the broader TOPIX index trades at a forward P/E of just 17.1x. We have seen a massive compression in multiples over the last 36 years, even as earnings per share (EPS) have compounded.

Key Comparison: The Tale of Two Peaks (1989 vs. 2026)

• Index Level (Nikkei 225):

  • 1989 Bubble Peak: ~38,915

  • Jan 2026: 53,847 (+38% higher)

• Valuation (Forward P/E):

  • 1989 Bubble Peak: ~60x - 70x

  • Jan 2026: 23.9x (Nikkei) / 17.1x (TOPIX) (Valuations have compressed by ~65%)

• Cost of Capital (10Y JGB Yield):

  • 1989 Bubble Peak: ~6.0%

  • Jan 2026: ~1.1% (Capital is significantly cheaper)

• Equity Risk Premium:

  • 1989 Bubble Peak: Negative (-4.4%)

  • Jan 2026: Positive (+4.7%) (The signal has inverted; you are paid to take risk)

The crucial insight here is the Equity Risk Premium (ERP). In 1989, the bond market offered a risk-free 6%, while stocks offered a volatile 1.6% earnings yield. It was irrational to hold stocks. Today, the 10-year JGB offers ~1.1%, while the TOPIX offers an earnings yield of roughly 5.85%. Investors are being paid a premium of nearly 475 basis points to take equity risk. This is a signal of deep, persistent skepticism that has yet to be fully priced out.

The CAPE Ratio Perspective

Robert Shiller’s Cyclically Adjusted Price-to-Earnings (CAPE) ratio provides another layer of comfort. In the late 1980s, Japan’s CAPE ratio reached astronomical levels, nearing 100x, the highest valuation of any equity market in history. Today, the CAPE for Japan sits in the low-to-mid 20s, significantly below the US market, which is now around a CAPE of 40x.

The “intrinsic value” of a market is ultimately the present value of its future cash flows. In 1989, the market was pricing in growth rates that were physically impossible to achieve. In 2026, the market is pricing in modest growth, despite a backdrop of massive fiscal stimulus and corporate reform.

Sanaenomics and the End of Deflation

The second pillar of my thesis is macroeconomic. The inauguration of Prime Minister Sanae Takaichi has introduced a regime change that I believe the market has only partially discounted.

Sanaenomics is frequently compared to Abenomics, but as someone analyzing the legislative text, I see distinct differences. Abenomics was about defeating deflation through monetary velocity. Sanaenomics is about crisis management investment and strategic self-sufficiency. It is a wartime economy mindset applied to peacetime industrial policy.

I might not be a fan of the frivolous spending of Sanae Takaichi, but there is no denying that it is good for the stock market.

The ¥21.3 trillion ($136 billion) stimulus package approved in late 2025 is not a scattershot cash handout. It is highly targeted:

• Strategic Growth Investment (¥7.2 trillion): This capital is directed squarely at the commanding heights of the modern economy: AI, Semiconductors, and Defense. By subsidizing the capital expenditures (Capex) of major industrial firms, the government is effectively lowering their cost of equity and increasing their Return on Invested Capital (ROIC).

• Household Support (¥11.7 trillion): Sanaenomics addresses consumption with direct energy subsidies and cash handouts (¥20,000 per child). This is critical because it puts a floor under consumption during the transition to an inflationary environment.

For the value investor, this fiscal policy acts as a put option on the economy. The government has signaled it will not allow nominal GDP growth to stall. The Bank of Japan’s upgrade of FY2026 GDP growth to 1.0% is a direct result of this spending.

The End of Deflationary Psychology

For thirty years, cash was king in Japan because goods became cheaper tomorrow. That era is dead. Inflation is now sticky above 2%. The wage negotiations (Shunto) have resulted in hikes of over 5%. This “wage-price spiral” is actually the salvation of the Japanese equity market.

Why? Because inflation destroys the value of the massive cash piles held by Japanese corporations.

• The Hoarding Penalty: In a deflationary world, holding cash is an investment, so Japanese companies might have been seen as too conservative for hoarding cash, but it was actually a good strategy. In a 2% inflation world, a company with 40% of its assets in cash (a common profile in the Standard Market) is destroying shareholder value by 2% annually in real terms.

• The Behavioral Shift: Inflation forces management to do something with the cash, invest it (Capex) or return it (dividends/buybacks). We are seeing this shift in real-time.

Corporate Governance: The Revolution is Real

If macroeconomics provides the fuel, corporate governance is the engine. The change in tone over the last 24 months is nothing short of revolutionary. The days of polite nods and inaction are over. The Tokyo Stock Exchange (TSE) and the Financial Services Agency (FSA) have fundamentally altered the incentives.

The “Name and Shame” Regime

In March 2023, the Tokyo Stock Exchange released directives on how companies should improve their valuations by providing Price-to-Book (P/B) improvement plans.

Foreign observers who don’t understand Japan dismissed the TSE’s Cost of Capital Directive as there was no legal ramifications.

What they don’t understand is that in Japan, the threat of being named and shamed is more powerful than any punishment...

The exchange proved this by publishing a list of compliant companies, effectively isolating those who hadn’t disclosed P/B improvement plans.

By late 2025, over 90% of Prime Market companies had fallen in line.

The Unwinding of Cross-Shareholdings (Mochiai)

Cross-shareholding has been the poison pill of Japanese capitalism, companies holding shares in their clients and banks to cement relationships and insulate management.

• The Catalyst: The FSA has pressured the mega-banks and insurers to liquidate these holdings to zero.

• The Value Unlock: When a company sells a cross-shareholding, it converts a low-return asset (a stagnant stock) into cash. It then faces pressure to return that cash to its own shareholders. This creates a “double compounding” effect: the seller becomes leaner and more capital efficient, and the cash is recycled into the market via buybacks.

In 2024, share buybacks hit a record ¥18 trillion. In 2025, the pace accelerated further and will likely continue accelerating throughout 2026.

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