Japanese companies are headed toward their highest profits ever, as the falling yen boosts exporters fromToyota Motor Corp. (7203) to Uniqlo-operator Fast Retailing Co. (9983)

Aggregate net income at 195 of the largest listed companies will expand 10 percent to a record 17.5 trillion yen ($153 billion) this fiscal year, based on analyst estimates compiled by Bloomberg. Executives are catching up to such lofty expectations, with Toyota this week raising its profit forecast to an unprecedented 2 trillion yen.

As the earnings season winds down in Japan -- almost all companies will have reported results by next week -- exporters are emerging as one of the biggest beneficiaries of Prime Minister Shinzo Abe’s economic policies. For investors, the weaker currency is outweighing slumps in wages and local consumption, prompting them to push up the Nikkei 225 Stock Average to levels last seen seven years ago.

“Profits were pushed up somewhat surprisingly by the exchange rate recently,” said Tomohiro Okawa, a Japan equities strategist at UBS AG in Tokyo. “Still, there’s not much more that monetary policies can do, and structurally, nothing has changed for these companies.”

David Fuller's view

The crucial goal of Abenomics is to restore Japan’s economic vitality.  This would obviously be transformative for Japan’s economy, while strengthening not only the Asian region but also global GDP.  

If successful, and I would continue to give Abenomics the benefit of the doubt, this will further boost Japanese equities which appear to have resumed their bull market.