Fidelity International's Japan Investment Director Miyuki Kojima stated that the Japanese economy is gradually moving towards moderate inflation, and in 2024, both the TOPIX index and the Nikkei average index reached historic highs. Regarding the outlook for the Japanese economy, she mentioned that as Japanese companies are required to focus on capital costs and stock price management, the amount of share buybacks by Japanese companies has reached 1.7 times the amount for the whole of last year. Companies are accelerating the improvement of governance levels, focusing more on profit margins, and employee salaries have seen the largest increase since 1991. Inflation, salary increases, and the growth in Japanese corporate profits are gradually forming a virtuous cycle, leading to steady overall economic growth. Fidelity Investments believes that the demand for the Japanese stock market is positive, and the market outlook for 2025 and beyond remains attractive. Benefiting from the continuous improvement in market expectations for the effectiveness of corporate governance reforms in Japan, as well as positive factors such as Japan overcoming deflation and the depreciation of the yen, the TOPIX index and Nikkei average index reached historic highs in July 2024. Since 2023, based on the effectiveness of "Abenomics," the Japanese government has continued its policy of maintaining economic growth, leading the economy towards moderate inflation. The Tokyo Stock Exchange (TSE) required listed companies in 2023 to "pay attention to capital costs and stock price management," prompting domestic companies to accelerate their improvement in corporate governance and focus more on profit margins. From the beginning of this year until mid-November, Japanese listed companies announced plans to buy back shares amounting to 16 trillion yen, 1.7 times the record share buybacks in 2023. Calculated based on the amount of shares purchased, Japanese listed companies have been the largest buyers in the local market since 2012, supporting the rise of the stock market. Just as share buybacks have played an important role in the upsurge of the US market for many years, they are also playing a crucial role in the Japanese market. As the calculation of net share buybacks by listed companies subtracts items such as selling cross-shareholdings, direct comparisons cannot be made with this data. However, as of early 2024, the net share buyback amount was 6.4 trillion yen, which is still far from the planned share buyback amount of 16 trillion yen by listed companies, indicating that Japanese companies still have ample funds to continue buying back shares. The virtuous cycle formed by inflation, salary increases, and growth in Japanese corporate profits is driving stable growth in Japan's nominal GDP, which exceeded 600 trillion yen in 2024, reaching its highest level since the end of World War II. According to the "World Economic Outlook" report published by the International Monetary Fund (IMF), it is expected that Japan's nominal GDP will grow at a moderate rate of about 2% annually starting from 2025, with estimated nominal GDP reaching 700 trillion yen by 2029. In the spring labor-management negotiations, also known as "Shunto," the average salary increase negotiated between unions and employers this year was 5.1%, the first time it has exceeded 5% since 1991. After deducting the annual merit-based salary adjustment, the average salary increase is 3.6%, indicating that the long-term downward trend in real wages has finally turned positive. Although the salary increase has widened, the proportion of salaries to corporate profits continues to decline, especially in large enterprises, reflecting that Japanese companies still have room to increase salaries. It is expected that the virtuous cycle of the Japanese economy will further strengthen in the future, and after companies make profits, they will fairly distribute salaries to balance profitability and production capacity. When household income increases, it will promote consumption, drive funds back to the company's sales, and further boost corporate profits. On the US front, with the reelection of Trump for a second presidential term, the extent to which his protectionist policies will affect the global economy remains uncertain. Despite the uncertainties, the long-term upward trend of the Japanese economy and stock market continues.