Japanese stocks have entered a recovery phase following the correction in AI-related shares, with signs that funds are beginning to flow into a broad range of sectors beyond AI, including banking, machinery, heavy industry and electrical equipment. Against a backdrop of solid corporate earnings and a stable macroeconomic environment, stock performance is expected to enter a phase in which market interest broadens.
Japanese stocks fell over the past month or so as AI-related semiconductor shares underwent a correction and the yen strengthened, but have since bottomed out and entered a recovery phase. The Nikkei 225 fell by about 15% at its worst from its peak, but recovered to levels near the high recorded on 22 June. Meanwhile, the TOPIX has hit a new all-time high (as of 14 August, the time of writing).
Corporate earnings remain solid, and the macroeconomic environment is also expected to remain firm. The prevailing view is that the latest decline reflected a correction in excessive valuations rather than deteriorating earnings. For medium- to long-term investors, it is being seen as an opportunity to reassess promising stocks, with the potential for market interest to broaden beyond AI-related shares.
As stock prices recover, funds are expected to flow not only into semiconductor-related stocks but also into sectors such as banking, machinery, heavy industry and electrical equipment. The focus is expected to turn to identifying promising sectors through analysis of corporate earnings in Japan and the United States, as well as currency trends.
The next page will examine promising sectors through analysis of corporate earnings and currency trends in Japan and the United States.