“In today’s world, where stability itself has become a scarce and valuable asset, resilience means the ability to restore balance after being shaken by external forces. Tokyo has that resilience,” said Nakaso Hiroshi, Chairman of FinCity.Tokyo, in his keynote speech at the FinCity Global Forum 2026 in early February. Held in the city’s Kabutocho District, the event gathered a range of experts to discuss Tokyo’s strength as a finance hub amid the current volatility.
Global investors clearly agree, as evidenced by historic highs in overseas investors’ net purchasing of Japanese equities and a record year-end above 50,000 for the Nikkei 225. While a weak yen has added to the momentum, a closer look reveals several strengths that give Tokyo its enduring resilience.
Following the signing of an MOU for stronger ties between Tokyo and Frankfurt, Nakaso Hiroshi, Chairman of FinCity.Tokyo, and Oliver Behrens, Chairman of Frankfurt Main Finance, held the keynote dialogue at FinCity Global Forum 2026 on the topic of collaboration among financial centers amid global tensions.
1. In troubled times, Tokyo stands for stability and rule of law
Japan’s stable democracy and commitment to the rule of law enables a sophisticated capital market characterised by a high degree of institutional trust.
In the World Bank’s World Development Indicators, Japan scores first among G7 nations on Government Effectiveness and Political Stability and Absence of Violence/Terrorism. In Kearney’s 2025 FDI Confidence Index, which ranks legal and regulatory efficiency, Japan also ranked top in Asia Pacific, while climbing from seventh to fourth globally year-on-year.
“Japan has widely diversified industries, with 3,900 publicly held companies, deep liquidity in equity, fixed income and forex, and a rule-based regulatory environment. The central and regional governments are very well coordinated,” emphasised Honda Keiko, Professor at Waseda Business School, in a panel at the FinCity Global Forum 2026.
Moreover, Tokyo enables access to national household financial assets surpassing JPY 2,000 trillion ($13.3 trillion), which is shifting from cash savings into investments.
2. Tokyo leads the way in the era of the green transition
Japan is at the forefront of mobilising finance for sustainability. In February 2024, the government launched the world’s first sovereign transition bond as part of its strategy to raise JPY 150 trillion ($1 trillion) in public-private investment for the green transition.
Meanwhile, Tokyo is perfectly placed to lead the greening of Asia’s manufacturing centres as the heart of extensive Asian supply chains and a global top producer of greentech patents. Already, the city is rapidly developing into Asia’s hub for green finance.
Tokyo’s focus on resilience and infrastructure is particularly notable. The success of the TOKYO Resilience Bonds — the first to be certified under the Climate Bonds Resilience Criteria — clearly showed investors’ demand for resilience-focused investments capable of stable long-term returns amid increasing climate risks. Aimed at funding the city’s capacity to cope with increasingly severe storm and flood disasters caused by climate change, the bond attracted EUR 2.2 billion ($2.6 billion) in bids and was oversubscribed sevenfold.
With Japan moving to reach net zero by 2050, global investors can look forward to a strong push into climate-resilient infrastructure, as well as renewable energy, battery storage systems and other technologies.
3. Tokyo is the beating heart of Japan’s investment boom
In December 2023, the government vowed to make Japan a “leading asset management centre”. Tokyo, the home of an unrivaled concentration of financial institutions and asset managers covering 75% of national AUM, was designated a “Special Zone for Financial and Asset Management Businesses” with eased regulations and lower barriers to entry for foreign players.
With the return of inflation, Japan has since decisively shifted from traditional cash deposits to higher-yielding investments, triggering huge demand for asset management services.
The number of domestic individual shareholders reached a record high of 83.59 million in 2024, up 12% year-on-year — the highest growth rate in 37 years. There are now about 27 million tax-exempt NISA investment accounts holding over JPY 60 trillion in assets, and the number keeps increasing.
As the drive to deregulate the sector and attract foreign firms continues, Tokyo’s asset management space will continue to see large capital inflows in the foreseeable future.
4. Tokyo is committed to unlocking the corporate value of listed firms
Amid Japan’s successful corporate governance reforms, the Tokyo Stock Exchange has been instrumental in raising the investability of Japanese listed firms.
Firms have been pushed to improve capital allocation, return on equity, disclosure and investor engagement, while listing standards have been tightened and underperforming firms have been delisted. To boost transparency for foreign investors, companies on the top-tier Prime Market must now disclose key information in English.
The result? Five consecutive years of dividend increases, reaching JPY 20 trillion ($133.33 billion) at the end of 2025, along with record share buybacks, cross-shareholdings at just 12% of listed shares and a spike in foreign investor participation.
Also speaking at the FinCity Global Forum 2026, Shindo Toru, Chief Investment Officer, United Nations Joint Staff Pension Fund, said: “Over the past years, Japanese equities have strengthened remarkably. Corporate governanace reforms are driving real behavioural change among corporations.”
Reforms will accelerate this year. In October 2025, Japan’s Financial Services Agency (FSA) launched discussions on the next Corporate Governance Code, with the still-remaining cash holdings a central topic. Coupled with improved English disclosure, global investors can expect a new phase in Tokyo’s quest to unlock corporate value.
5. Tokyo offers a new frontier for digital finance
Tokyo has caught the attention of digital finance innovators worldwide.
Japan’s fintech market is estimated to grow 14.1% annually to JPY 4.5 trillion ($30 billion) by 2033, driven by an ecosystem encompassing some 700 companies and increasing collaboration between fintechs and financial institutions. Further, the Web3 economy is forecast to grow 20-fold to JPY 2.4 trillion ($16 billion) over the 2021-2027 period. And in October 2025, Japan launched the world’s first yen-backed stablecoin, a significant step toward a truly digital economy that could reshape how money moves inside and outside the country.
Behind this momentum is a government that proactively nurtures innovation and partnerships. The FSA’s regulatory sandbox enables ventures from inside and outside Japan to trial new solutions. A university endowment fund of JPY 10 trillion ($66.67 billion) is channeling resources into research and technology commercialisation. Networking opportunities also abound, notably the annual Japan Fintech Week, organised by the FSA.
Coupled with the Tokyo Metropolitan Government’s ample support for business launches — including subsidies, business matching and English-language assistance — Tokyo is sure to be on digital finance innovators’ radar for years to come.
Note: JPY-USD calculations are based on a rate of 1USD = JPY150.
¬ Haymarket Media Limited. All rights reserved.
Source link
#resilient #capital #drivers #Tokyos #enduring #financial #strength #FinanceAsia
