Despite Kioxia Holdings' loss of momentum, the upside potential for Japanese stocks is expanding. Following a pullback in AI-related stocks, lagging stocks are being reassessed, strengthening the resilience of the broader market.
According to a Bloomberg report, TOPIX rose 3.8% in August, with approximately 75% of its constituents advancing. The US lagged the S&P 500 in the percentage of stocks that rose, while Japanese stocks also had a higher proportion of gainers than their European and US counterparts in July.
TOPIX rose 14% in the April-June quarter on a surge in AI-related stocks, but only slightly more than half of its constituents advanced. Recently, the focus of buying has broadened, and stocks with relatively low exposure to AI have gained popularity.
Market participants view positively the emerging trend of assessing fundamentals beyond semiconductors. Against the backdrop of strong earnings at Japanese companies, some believe investment funds are returning to lagging stocks.
If capital investment targeting AI remains strong, related stocks could resume their upward trend. For now, however, lagging stocks are recording particularly notable gains, and rebounds have also been observed in stocks including Kioxia Holdings.