On Monday, Japan's Nikkei share average fell by more than 1% due to concerns over high valuations in the tech industry. The Nikkei slid to 50,220.15, with artificial intelligence and tech stocks like SoftBank Group and Advantest leading the decline.
SoftBank Group, a major investor in AI-focused startups, dropped 6.3%, while Advantest, a supplier to Nvidia, fell 5.8%. These two companies accounted for a significant portion of the Nikkei's 671-point slide.
Meanwhile, the broader Topix index, which includes a wider range of stocks, only fell 0.1%. Domestic demand stocks, such as rail, pharmaceuticals, and retail, saw gains of between 1.5% and 1.8%.
The banking sector also rose 1.3% ahead of an expected interest rate increase by the Bank of Japan on Friday. This increase is expected to boost the economy and was reinforced by the central bank's quarterly Tankan survey, which showed sentiment among big manufacturers at a four-year high.
According to Nomura Securities strategist Fumika Shimizu, the decline in tech stocks is not a broad-based weakness, but rather a sector rotation away from big tech shares that have performed strongly this year. This shift is also seen in the Philadelphia SE semiconductor index, which plunged more than 5% on Friday.
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