The Nikkei Average fell ¥4,332 at one point today. Experts at Rakuten Securities Economic Research Institute outlined their views on the sustainability of the AI investment boom and the market correction.
The Nikkei Average recorded a sharp temporary decline in today's market, with the drop reaching ¥4,332. The decline was attributed to a combination of concerns over excessive AI investment, a shock from rising interest rates and mounting concerns over the protracted situation in the Middle East.
It was suggested that the results of the US midterm elections, concerning restrictions on data-center construction, intensified selling pressure on AI- and semiconductor-related stocks. While some view the decline as an appropriate long-term correction, others pointed to the possibility that the downward trend will continue in the short term.
As for the short-term market dynamics, it was explained that funds forced to sell had a major impact, and that during declines, selling often moves ahead of investors indicating that valuations are becoming attractive. Ultimately, corporate earnings were said to determine market direction.
The forecast P/E for the TSE Prime Market fell from 20x at the start of the year to 14.7x at the close. Earnings were considered solid, and the view was expressed that this level could return to a fair valuation over the long term.