Japan stock P/B ratio 2026: 1 in 3 Firms Still Trade Below Book Value Amid Rallies

Japan's stock market is caught in a strange paradox. While major indices hit historic highs, the bargain bin is surprisingly full. According to Nikkei, as of January 2026, roughly one-third of listed Japanese companies are still trading with a P/B (price-to-book) ratio below 1. This suggests that many firms are either undervalued or failing to convince investors of their future growth potential.

The Japan stock P/B ratio 2026 Conundrum

The Tokyo Stock Exchange (TSE) has been pushing for better capital efficiency, but the results are mixed. While the Nikkei Stock Average reached a new all-time high in 2025, the benefits haven't trickled down to everyone. Many companies are sitting on massive cash reserves they aren't using, while others are suffocating in overcrowded sectors. This 'excessive caution' is keeping their market value below the liquidation value of their assets.

Why Restructuring is the Next Big Play

The gap between winners and losers in Tokyo is widening. For global analysts, the story isn't about the index anymore—it's about the 33% that haven't caught up. These companies are prime targets for activist investors and M&A activity. If these firms don't fix their balance sheets, they might find themselves forced to merge or delist as the TSE tightens the screws.