AI-led rally with measured volatility:
Japanese equities advanced strongly in May, led by AI and semiconductor-related stocks. While the market experienced intermittent volatility amid earnings announcements and rising interest rate concerns, sentiment improved towards the end of the month.
Resilient domestic backdrop despite external uncertainties:
The Japanese economy continues to be supported by improving real wages, sustained capital expenditure—particularly in automation and digitalisation—and stable domestic demand. Although geopolitical developments and energy prices warrant close monitoring, the overall macroeconomic backdrop remains broadly resilient.
Constructive outlook supported by structural and policy developments:
We retain a constructive medium- to long-term view on Japanese equities, underpinned by structural shifts such as inflation normalisation and ongoing corporate reform. The evolving policy framework—often referred to as “Sanaenomics”—may provide an additional and differentiated tailwind, with further clarity expected in the government’s “Basic Policy” as early as July.
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Written by Kazuhiko Hosaka, Senior Product Specialist, Asset Management One Co., Ltd