Japanese Equities Slump as Investors Dump Tech Stocks
Japanese equities declined, led by a fall in AI-related stocks as investors offloaded tech shares after declines in Nvidia and Dell Technologies on the US stock market over the weekend.
Topix Index fell 0.4% to 3,063.19 as of market close Tokyo time
Nikkei declined 1.2% to 42,188.79
SoftBank Group Corp. contributed the most to the Topix Index decline, decreasing 4.8%. Out of 1,680 stocks in the index, 796 rose and 821 fell, while 63 were unchanged.
“Look how far things have come with AI-chip names like Nvidia having run ahead,” said Hiroyuki Ueno, a chief strategist at Sumitomo Mitsui Trust Asset Management. “Everything is getting expensive and some investors already felt valuations were stretched. In that environment, headlines about Nvidia and the like tend to hit the sector directly.”
Selling pressure increased for electronics, machinery and precision equipment shares, while non-ferrous metal stocks also took a hit. The Topix index fluctuated between gains and losses as domestic demand dependent sectors like pharmaceuticals and food remained firm.
There had been too much capital crowding into semiconductor stocks and “valuations had run up, and what we’re seeing now is the corrective reaction,” said Hitoshi Asaoka, chief strategist at Asset Management One. For the next two weeks “the sectors likely to benefit from here will be domestic-demand names, much like what we’re seeing today.”
Source: Bloomberg
