Yasuo Ueki (植木靖男) outlines the outlook for an overall market with room to spare, while urging caution over buying AI- and semiconductor-related stocks on dips as investors shift away from the market's leading names. He also highlights stocks to watch, including MonotaRO and 井関農機.
Japan's stock market is expected to remain generally hesitant, with the weakness of U.S. equities and rising long-term interest rates weighing on sentiment. In particular, the market is focused on whether the 10-year Japanese government bond yield will reach 4%.
AI and semiconductor stocks are positioned as the leaders of the rally, but are currently in a correction phase. Kioxia Holdings and SoftBank Group appear to be finding a floor, but are still working through selling into rebounds.
If the market as a whole is judged to have further underlying strength, a strategy of preserving the market's overall strength while shifting funds into companies with strong earnings may be viable. MonotaRO and 井関農機 are highlighted in particular as stocks to watch, with both expected to have favorable earnings outlooks from 2026 onward.
Looking ahead, the outlook is for the market to move in tandem with the AI and semiconductor themes, with around April to May next year expected to be the critical period. In light of market conditions in recent years, the view expressed is that investors should avoid overheating in high-growth stocks while also keeping a close eye on the performance of supporting names.