Editor’s Note
Today’s market update highlights a record-setting Nikkei, driven by sustained AI optimism around firms like SoftBank Group. We also note increased corporate activity and a wave of stock splits, signaling dynamic movements in Japan’s equity landscape.
- The Nikkei Average hits record highs for consecutive days, with SoftBank Group sustaining AI expectations.
- SoftBank Group accelerates AI investment; Takashimaya sees activity from former Murakami Fund affiliates.
- Numerous stock splits! Including Nippon Steel, Pan Pacific International Holdings, IHI, etc.
Today’s Market: The Nikkei Stock Average continued to rise, updating its all-time high for consecutive days. In the US market on the 22nd, major stock indices updated their highs, but fell back on the 23rd. On the 22nd, NVIDIA announced an investment in OpenAI, the developer of the conversational AI “ChatGPT,” leading to buying centered on high-tech stocks. However, on the 23rd, Federal Reserve Chairman Powell showed a cautious stance on additional rate cuts, and skeptical views about increased spending on AI also emerged, causing high-tech stocks to be sold off. In the Tokyo market after the holiday, selling emerged in stocks like Advantest, and the Nikkei Average fell by over 200 yen at one point. However, SoftBank Group, which is accelerating investment in AI, rose sharply, pushing up the Nikkei Average.
In the US, Fed officials are significantly divided in their stance on additional rate cuts. Focus is likely to intensify on key economic indicators, centered on the August Personal Consumption Expenditures (PCE) Price Index to be announced on the 26th. Additionally, August New Home Sales will be announced in the US tonight.
[Nikkei Average] 45,630.31 yen ↑ (+136.65 yen)
[Growth 250] 766.78 ↓↓ (-8.20)
[NY Dow] 46,292.78 dollars → (-88.76 dollars, 23rd)
[Nasdaq] 22,573.474 ↓ (-215.502, 23rd)
◆ SoftBank Group (9984) 19,000 yen (+1,070 yen)
The company announced it will establish five new AI data center hubs in the US related to its AI infrastructure plan “StarGate.” Regarding the $500 billion total investment target announced in January, prospects have emerged to achieve it by the end of 2025, earlier than initially planned. It is also believed that the announcement of NVIDIA’s investment in OpenAI, which is partnering in “StarGate,” was viewed positively.
◆ IHI (7013) 17,710 yen (+1,565 yen)
It was reported that a visiting US House delegation held talks with Chinese leadership and discussed the purchase of Boeing aircraft. According to past reports, this could be a large contract for up to 500 aircraft. Boeing’s stock price rose +2.00% in trading on the 23rd, and buying entered major heavy industry companies handling aircraft engines, etc., in today’s Tokyo market.
◆ Takashimaya (8233) 1,614.5 yen (-30 yen)
Investment firm City Index Eleven, affiliated with the former Murakami Fund, submitted a large shareholding report, revealing that as of the 12th, it holds 5.32% of the company’s shares (total of joint holders). Aya Nomura, the eldest daughter of Mr. Yoshiaki Murakami, is a joint holder. However, the company’s stock price has risen significantly since the beginning of September, and the submission of the report seems to have led to a sense of “news exhaustion” and selling.
Companies like Aeon and Ryohin Keikaku that implemented stock splits based on end-August became topics (see August 13 issue), but 67 companies are scheduled to implement splits based on end-September (excluding real estate investment trusts = REITs). Stock splits lead to a lower minimum investment amount. In April this year, the Tokyo Stock Exchange published a report stating that “the level of investment unit sought by individual investors is around 100,000 yen.” In response, it seems that the number of companies proceeding with stock splits is increasing again. Stocks that were previously too expensive to invest in may become accessible through stock splits.
Nippon Steel, which has been in the news for acquiring US Steel, and Pan Pacific International Holdings, which operates discount stores like “Don Quijote,” are both implementing a 1-for-5 split. Nippon Steel’s minimum investment amount will drop to below 100,000 yen, and Pan Pacific HD is also expected to become investable from around 100,000 yen, likely expanding the base of individual shareholders. Additionally, for Pan Pacific HD, it’s welcome that shareholder benefits can be received from 100 shares post-split. Post-split, 100 shares yield 300 yen worth of majica points, 300 shares yield 1,000 yen worth, and 500 shares (equivalent to current 100 shares) or more yield 2,000 yen worth as before (see September 3 issue). Although the current stock price is slightly down, expectations for medium- to long-term growth remain strong.
Nitori Holdings, known as a high-priced stock, is also implementing a 1-for-5 split, with the expected minimum investment amount being just under 300,000 yen. Furthermore, IHI and Square Enix Holdings stand out for their high year-to-date stock price increase rates. IHI is expected to perform in fields like “Aviation, Space, Defense” and “Resources, Energy, Environment,” while Square Enix HD is in the midst of structural reform but significantly raised its dividend level in the previous term. The movements of “activist shareholders” are also noteworthy.
Although not in the table, Japan Elevator Service Holdings deserves attention as a company making great strides. Its current stock price is 35.1 times its initial price at listing in March 2017 (111.25 yen considering three past stock splits). The stock price has continued to rise long-term, and this will be its fourth stock split since listing (1-for-2). As the top independent elevator maintenance company in Japan, it is expanding its share in the maintenance market while capturing renewal demand.
Note: The last trading day with rights for end-September based stock splits is the 26th, and trading at post-split prices will begin from the next business day, the 29th.
(ZAI Analyst Daisum Kobayashi)