Heads of Japan's five major financial groups welcome rising rates but flag fiscal concerns

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Summary · why it matters

The heads of five major financial institutions, including Sumitomo Mitsui Financial Group, attended a symposium hosted by Nikkei Inc. on the 8th, expressing positive views on rising domestic interest rates while also pointing out that the moves contain elements of a "bad rate rise" driven by fiscal concerns. Junichi Hanzawa, president of Mitsubishi UFJ Financial Group, said that if the rise in rates reflects the economy's underlying strength and higher inflation, it should be viewed positively as part of economic normalization, while also acknowledging that a rise in risk premiums stemming from the market's view of fiscal sustainability is partly reflected. SMFG president Toru Nakashima likewise assessed the current rate rise as "largely the result of a good increase in rates," but said a certain number of investors are concerned about Japan's fiscal health, and noted that risks surrounding the situation in the Middle East are also partly priced into rates. Mizuho Financial Group president Masahiro Kihara cited as a risk the competition for long-term funding amid fiscal expansion by governments and strong investment demand centered on artificial intelligence and data centers, saying he sees an environment in which long-term rates could easily spike and is watching the impact on lower-rated companies. Views on the stock market were largely bullish: Nomura Holdings president Kentaro Okuda expects the Nikkei average to reach around 75,000 yen by year-end and sees a move above 80,000 yen by the end of 2027, while Daiwa Securities Group president Akihiko Ogino mentioned the possibility of 80,000 yen at year-end, 88,000 yen at the end of 2027, and 300,000 yen by 2045.

Impact on assets 7

Financials▲
Mizuho Financial Group, Inc.
8411
± MixedMonetaryrelevance

Mizuho's Kihara welcomed rising rates but flagged risks of long-term rate spikes and pressure on lower-rated companies.

Daiwa Securities Group Inc.
8601
▲ PositiveMonetaryrelevance

Daiwa's president gave bullish Nikkei targets, benefiting from the rising-rate environment welcomed by financial groups.

Nomura Holdings, Inc.
8604
▲ PositiveMonetaryrelevance

Nomura's president expects the Nikkei to reach around 75,000 by year-end, bullish on rising rates and markets.

Others▲