2025 Japan's Hot Topics to Watch: Awakening Investment Awareness from Fundamental Business Backgrounds

If you’ve been following investment news for the past 2-3 months, you probably can’t escape the various voices from the Japanese stock market. The Nikkei 225 index has surged to break a new all-time high in 34 years! However, many people might feel confused about the actual structure of the Japanese market and which stocks to watch in 2025. Here’s the answer.

Understanding the Japanese Stock Market Clearly

The Tokyo Stock Exchange (TSE) is one of the largest securities exchanges in the world, with about 4,000 listed companies and a market capitalization that towers into the sky.

For analysts, the main gauges are usually Nikkei 225 and TOPIX, which serve as weather indicators.

Nikkei 225 is considered the number 1 figure of the market, weighted by the stock price per unit. This means expensive stocks have a louder voice. Sometimes, it can be compared to Thailand’s SET50.

TOPIX covers all stocks in the main market segments and is weighted by market value. Countless analysts believe TOPIX more accurately reflects the overall market picture.

Main Reasons Why 2025 Is a Year of Opportunity for Japan

Before diving into specific stocks, let’s look at the overall situation, as it helps us understand why this period is so interesting.

The economy is breaking free from deflation. Japan has been stuck with falling prices for decades, discouraging spending and investment, leading to sluggish economic growth. But now, the Bank of Japan (BOJ) is moving, targeting a 2% inflation rate annually. The situation has changed.

Gradual monetary policy tightening. This stems from prolonged loose monetary policies that have become uncomfortable. BOJ is not raising interest rates continuously but signals gradual increases in 2025. This is a healthy sign for the economy.

Fundamental corporate reforms to create shareholder value. The Japanese government and stock exchanges want Japanese companies to shift focus, emphasizing shareholder returns over mere expansion or market share. This is a deeper transformation.

Stock prices haven’t yet soared to the levels discussed. Compared to major global markets, especially the US, many Japanese stocks are not considered “expensive.” P/E and P/B ratios are often more attractive, and some stocks offer dividends.

10 Japanese Stocks to Watch in 2025

Here’s the secret! Let’s look at 10 stocks worth paying attention to.

1. Toyota Motor - Winner in the New Car Game

Toyota is a name everyone knows worldwide. Its infrastructure is recognized globally, including in the US. The strength of this company lies in leading hybrid technology, which has been developed for a long time. Now, it’s racing against time to develop electric vehicles (EV) and solid-state battery technology.

Opportunities for Toyota are plentiful: it remains a leader in hybrids, has high potential in EV transition, and a weak yen benefits exports.

Key info: P/E around 9-10x, dividend yield 2.5-3.0%, ROE satisfactory.

2. Keyence - The King of Massive Profits

When talking about highly profitable Japanese companies, Keyence must be on the list. It’s a giant in sensors, measurement systems, and advanced automation.

Its direct sales strategy reduces middlemen costs, resulting in high gross margins that everyone consults. It also aligns with global trends: rapid expansion of automation and AI.

Key info: P/E about 35x, dividend 0.5%, high ROE, excellent growth potential.

3. Sony Group - The Entertainment Empire

Sony isn’t just an electronics company. It’s a powerhouse in entertainment, with PlayStation gaming systems that gamers rely on, camera sensors, film and audio signals, entertainment content, and financial services.

Its importance lies in creating products and services desired worldwide, building content ecosystems to diversify revenue streams.

Key info: P/E around 17-18x, dividend 1.1%, steady profit growth expected.

4. Fast Retailing/UNIQLO - The Fashion Powerhouse

Currently, Thais are well familiar with UNIQLO, a global fast fashion leader. It influences consumer purchasing power through its market expansion.

Both in Japan and abroad, growth continues. One concern: high P/E ratio of about 38x, reflecting high future growth expectations.

Key info: steady expansion, dividend 0.9%, online sales soaring.

5. Mitsubishi UFJ Financial - The Imperial Financial Institution

MUFG is the largest bank in Japan, earning from lending, asset management, and other financial services.

In 2025, with the BOJ gradually raising interest rates, net interest margins will widen. Additionally, economic recovery and corporate reforms will boost loan and investment demand.

Key info: P/E about 10-11x, dividend 3.0%, ROE gradually improving.

6. Mitsubishi Heavy Industries - Heavy Industry Powerhouse

MHI is a comprehensive heavy industry company, involved in energy, defense, aerospace, and machinery.

Key features: MHI benefits from two major trends—rising global security budgets and the shift toward clean energy.

Key info: P/E around 34-38x, dividend 0.8-1.0%, profits and revenues expected to grow steadily.

7. Tokyo Electron - The Small Chip, The Big Economy

Anyone thinking about AI and semiconductors should know Tokyo Electron (TEL). It’s a legendary manufacturer of chip-making equipment, a pulse of the industry.

TEL benefits directly from the chip recovery and massive investments in AI and Data Center technologies worldwide.

Key info: P/E about 30-35x, dividend 2.1%, profits expected to surge in FY2025 and 2026.

8. Advantest - The Chip Testing Expert

After a slowdown in 2024, Advantest, a global leader in chip testing equipment, is preparing for a comeback.

Investments in semiconductors for AI and EVs mean more complex chips requiring more precise testing.

Key info: P/E about 19-29x, dividend 0.6-1.2%, profits expected to return to high levels.

9. Nintendo - Moving into New Gaming Devices

Nintendo is a legendary gaming company. In 2025, there’s buzz about the launch of Switch 2, expected to be a blockbuster for sales.

Additionally, Nintendo is expanding into movies and theme parks (Super Nintendo World), strengthening its brand and opening new revenue streams.

Key info: P/E around 18-20x, dividend 1.6%, profits and revenues expected to jump significantly.

10. Itochu - The Full-Cycle Trading Powerhouse

Finally, Itochu is a broad trading company involved in energy, metals, machinery, chemicals, food, textiles, IT, and finance.

This company has attracted investments from legendary investor Warren Buffett. Its adaptability and risk diversification are outstanding.

Key info: P/E about 10-11x, dividend 200 yen per share (increased 25%), continuous dividend payments.

How Thais Can Invest in Japanese Stocks Comfortably

Path 1: Buy Stocks Directly or via Long-term ETFs—No Need to Worry

Buy individual stocks through foreign stock trading accounts offered by Thai brokers like Kasikorn Securities, TISCO, Finansia. Suitable for those who want to select stocks themselves and have time to learn.

Via ETF funds. Two ways: buy Japanese ETFs directly through Thai brokers or invest in Thai mutual funds that hold foreign ETFs, such as KT-JPFUND-A by Krung Thai Asset Management, ideal for those who prefer a more hands-off approach.

Path 2: Short-term Trading with CFDs for Quick Gains

CFD doesn’t require actual stock purchase but involves contracts with brokers to speculate on price differences, predicting whether indices or individual stocks will rise or fall.

Advantages: low capital, profit in both bullish and bearish markets, suitable for beginners. But real risks require setting strict Stop Loss orders.