Japan quarterly capex rises 6.5% as government seeks to spur investment

Group 1 - Japanese spending on factories and equipment rose 6.5% year-on-year in Q4, indicating resilient investment demand supporting a barely growing economy [1] - Capital expenditure totaled 15.4 trillion yen ($97.9 billion) in Q4, reaching a record high for the quarter and marking the fourth consecutive quarter of growth [3] - Corporate sales increased by 0.7% in Q4 from a year earlier, while recurring profit rose by 4.7% [3] Group 2 - The government aims to bolster investment through targeted public outlay in sectors deemed vital for economic security [1] - Planned government policy measures, such as capital injections, subsidies, and tax credits, are expected to significantly impact corporate spending [4] - Mizuho Research & Technologies estimates that government measures could lift capital expenditure by about 1%, with projected real capital expenditure growth of 2.7% in fiscal 2026 and 2.5% in fiscal 2027 [5] Group 3 - Companies are replacing ageing, low-efficiency equipment to address a chronic labor shortage linked to a shrinking population [4] - There are concerns about whether government funding alone will spur companies to invest, as firms already have sufficient profits for capital spending [5][6] - External risks, such as tensions in the Middle East and tariff issues, complicate firms' willingness to invest [6]