On Monday, Japan's Nikkei share average experienced a drop of over 1% due to concerns about the valuation of tech stocks, following similar trends on Wall Street. The Nikkei fell by 1.3% to 50,168.11, with SoftBank Group and Advantest, an Nvidia supplier, being the biggest contributors to the decline.
In contrast, the Topix, which is less focused on tech, rose by 0.2% to 3,431.47. Out of the 225 components of the Nikkei, 130 stocks saw an increase, while 94 experienced a decrease, with one stock remaining unchanged.
According to Nomura Securities strategist Fumika Shimizu, this trend is not a sign of overall market weakness, but rather a sector rotation away from big tech shares that have performed strongly this year. SoftBank Group and Advantest accounted for approximately 560 points of the Nikkei's 668-point decline, with Fujikura also experiencing a significant drop.
As investors move away from tech stocks, they are seeking opportunities in other sectors. In Japan, domestic demand stocks have seen significant gains. The rail sector rose by 2.1%, making it the top performer among the Tokyo Stock Exchange's 33 industry groups. The services and retail sectors also saw increases of over 1.7%.
The banking sector climbed 2% in anticipation of an interest rate increase by the Bank of Japan on Friday. This expectation was reinforced by the central bank's quarterly Tankan survey, which showed that sentiment among big manufacturers has reached a four-year high. Higher interest rates are expected to boost returns from lending and investing.
Key keywords: Japan stock market, tech stocks, sector rotation, interest rate increase, Bank of Japan, Nikkei, Topix, SoftBank Group, Advantest, Nvidia, Fujikura, domestic demand stocks, banking sector.
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