Editor’s Note
This week’s market review highlights the Nikkei 225’s slight decline amid thin, directionless trading, influenced by a US holiday and a four-day losing streak. The subdued activity underscores the index’s sensitivity to international investor participation.
This week (February 16-20), the Nikkei 225 index closed slightly lower, ending at 56,825.70 yen, down 116.27 yen (0.20%) from the previous weekend.
On February 16, the US market was closed for Presidents’ Day, limiting participation from overseas investors in the Japanese market in the first half of the week, leading to generally directionless trading. Amid this, the Nikkei 225 fell for four consecutive days from the 12th to the 17th, even dropping to 56,135 yen at one point.
On February 18, the second Takachi cabinet was inaugurated in a special Diet session, boosting policy expectations for “Takachi 2.0,” and the Nikkei 225 rose to 57,392 yen. Furthermore, following a rally in US tech stocks on the 18th, semiconductor and AI-related stocks were bought in the Japanese market on the 19th, pushing the Nikkei 225 to 57,709 yen.
However, Advantest (6857) plummeted after revealing on February 19 that it had suffered a ransomware cyberattack, which at times weighed on the Nikkei 225.
On the weekend of February 20, influenced by a decline in the US market on the 19th due to concerns about a potential new military conflict between the US and Iran, geopolitical risk aversion heightened in the Japanese market, leading to broad selling.
Additionally, on February 17, US President Trump posted on his social media that the details of the first US investment project had been decided. This sparked strong interest in stocks related to the three projects mentioned: “artificial diamond production,” “crude oil export facility development,” and “gas-fired power plant development.”
For next week (February 24-27), given that profit-taking sales likely occurred in the Japanese market ahead of the three-day holiday ending February 20, a rebound-buying trend is expected at the start of the week, provided geopolitical risk concerns do not escalate excessively during the holiday.
Furthermore, developments next week are expected to be influenced by external factors, particularly from the US. Notably, NVIDIA (NVDA) and Salesforce (CRM) are scheduled to report earnings on February 25.
If Salesforce announces a cautious outlook below expectations, fears about the threat posed by AI evolution could reignite, likely strengthening selling pressure on software companies. Conversely, if results exceed expectations, selling pressure on software companies may ease.
Regarding Advantest, which fell sharply this week, if details of the cyberattack reveal limited impact on performance, a rebound is anticipated, which could improve investor sentiment.
Moreover, driven by expectations for “Takachi 2.0,” Takachi-related stocks are likely to continue attracting cyclical interest ahead of the planned Japan-US summit in March.
Kasai Kogyo (7256) topped this week’s gainers list with a +117.79% increase.
INFORICH (9338) ranked second in gainers. On February 13, BCJ-102, a special purpose company under US-based Bain Capital, announced a tender offer (TOB) for INFORICH as part of a management buyout (MBO). The TOB price was set at 4,560 yen per share, leading to convergence.
AI Mechatronics (6227), ranked third in gainers, announced on February 13 an upward revision of its consolidated operating profit forecast for the full year ending June 2026 from the previous 2.51 billion yen to 4.85 billion yen (2.3 times the previous year). It also announced a 3-for-1 stock split with a record date of March 31, which was well received.
On the other hand, Japan Precision (7771), ranked first in this week’s decliners list, announced its Q3 FY March 2026 results on February 13. While Q3 consolidated operating profit was 300 million yen (up 38.5% year-on-year), the decision to maintain the full-year plan disappointed investors, leading to a decline including limit-down moves.
Infcurion (438A) ranked second in decliners. On February 13, it announced an upward revision of its consolidated operating profit forecast for FY March 2026 from the previous 180 million yen to 300 million yen (2.1 times the previous year). However, the market reacted negatively as the plan implied a loss in Q4, despite cumulative consolidated operating profit for the first three quarters reaching 420 million yen.
US PPI data, NVIDIA and Salesforce earnings.