As the Nikkei 225 plunged against the backdrop of political events in Japan and the United States, some stocks reached year-to-date highs on strong earnings, dividend increases and share buybacks. While sharp declines in AI and semiconductor-related stocks moved the index, a two-tiered market became increasingly evident, with funds rotating into domestic-demand and financial stocks.
Following developments surrounding the results of the midterm elections in Japan and the United States, the U.S. SOX index fell approximately 12%, and the Nikkei 225 recorded a substantial decline of ¥3,643.13 the following day in the Tokyo market. Due to the Nikkei’s structure as an index based on 225 stocks, high-priced semiconductor and AI-related stocks were seen driving the market significantly.
Despite the Nikkei’s sharp decline, Oriental Land, Kotobuki Spirits and Sysmex were among the stocks whose share prices were supported by strong earnings and upward revisions, with some reaching year-to-date highs. Oriental Land in particular revised its full-year forecast upward and raised its dividend, while Kotobuki Spirits was rewarded for its earnings growth for the period.
ARE Holdings announced a share buyback and a dividend increase, sending its share price sharply higher. Shareholder-return measures with an impact on institutional investor supply and demand supported the market.
As a third factor, funds continued to rotate across sectors, moving from AI and semiconductor stocks into domestic-demand, financial and proprietary IP stocks. Funds were seen flowing into IP stocks such as Konami, Sony, Sega Sammy and Bandai Namco, as well as financial stocks and defensive stocks such as Central Japan Railway.