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Japanese defense-related stocks rallied sharply on Monday after a report by the Yomiuri newspaper said the government is preparing to establish a new bureau within the Ministry of Defense to strengthen international defense cooperation and promote defense equipment exports.
The report said the Japanese government and the ruling coalition are coordinating plans to create a dedicated bureau focused on expanding defense partnerships with allied and like-minded nations. The initiative is part of Japan’s broader strategy to enhance its defense capabilities as regional security challenges continue to intensify across the Indo-Pacific.
According to the report, the proposal is expected to be included in the government’s annual economic and fiscal policy guidelines later this month. If approved, the new organization would separate international cooperation responsibilities from the existing Defense Policy Bureau, enabling the ministry to more effectively oversee growing defense ties with countries in Southeast Asia and Europe.
Investor optimism over the report fueled strong gains across Japan’s defense sector. Mitsubishi Heavy Industries (TYO:7011), one of the country’s largest defense contractors, surged nearly 7% in early trading. Kawasaki Heavy Industries (TYO:7012) also climbed around 7%, while IHI Corp. (TYO:7013) advanced approximately 5%.
Other defense-related companies posted notable gains as well. Tokyo Keiki (TYO:7721) jumped more than 10%, reflecting strong investor confidence in the sector, while NEC Corp. (TYO:6701) rose about 4% as traders anticipated potential benefits from expanded defense cooperation and technology partnerships.
The Yomiuri report added that, if the plan moves forward, the government intends to submit legislation to amend the Ministry of Defense Establishment Law during next year’s ordinary session of Japan’s Diet. The proposal would represent the ministry’s first major organizational expansion since 2007.
The planned bureau underscores Japan’s increasing focus on strengthening defense diplomacy, expanding international security cooperation, and supporting domestic defense exports. The report also highlights Tokyo’s efforts to deepen collaboration with strategic partners while responding to an evolving regional security landscape. Investors viewed the proposal as a positive development for Japanese defense companies, driving broad gains across the sector as expectations grow for increased government support, defense spending, and export opportunities.
