Nikkei Declines as Tech Stocks Weigh Down Market
Japan's Nikkei share average faced a slight decline as concerns about high valuations in tech stocks, particularly those linked to artificial intelligence, weighed heavily on the market. On Monday, the Nikkei dipped less than 0.1% to 50,473.84 during the midday recess. The broader Topix index, however, managed a 0.4% gain, reaching 3,376.43, indicating mixed sentiments among investors.
A significant contributor to the Nikkei's drop was SoftBank Group, which saw a 2.5% decrease, subtracting 93 points from the index. Other tech-related companies, including Advantest and Tokyo Electron, also faced losses, highlighting a growing caution among investors regarding tech valuations. "There's a sense of overheating in high-tech stocks, making them susceptible to selling pressure," noted Fumika Shimizu, an equities strategist.
Despite these challenges, the overall trend on the Nikkei was positive, with 162 of its 225 components registering gains, while only 59 fell. This reflects a resilient market, as the Nikkei reached a record high of 52,636.87 in early November before profit-taking took effect, particularly on AI-related shares.
Market experts suggest that the current environment feels heavy, with expectations for sideways trading in the near term. "A rise from here would come with high risk," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
Interestingly, while chip-related stocks struggled, companies associated with increased demand for data centers thrived. Fujikura and Fuji Electric were among the top performers, rising by 5.7% and 4.1% respectively. The real estate sector also stood out, climbing 2.6%, making it the best-performing group among the 33 industry categories on the Tokyo Stock Exchange.
Conversely, banking stocks dipped by 0.7%, although this came after reaching their highest levels since 1999 last week, spurred by expectations of a Bank of Japan interest rate hike. As the market navigates these fluctuations, investors remain watchful and engaged with emerging trends, seeking opportunities amidst the uncertainties.
