■Investment Strategy Weekly “Lull in the Overall Market, But Many Investment Opportunities Remain.”

Investment Strategy Weekly

“Lull in the Overall Market, But Many Investment Opportunities Remain.”

 Is it a “dying summer market?” Trading value on the TSE, which had exceeded 3 trillion yen for 15 consecutive business days until the 17th, has remained in the 2 trillion yen range after 18th. The Nikkei Stock Average rebounded after the 21st of the week after testing the bottom of the 31,300–yen area on the 17th and 18th, but only moved toward a “return to the mean“ around the 32,000–yen area amid thin trading. On the U.S. market locally on the 23rd, the semiconductor NVIDIA (NVDA) made significant gains in after-hours trading following its earnings announcement, but almost wiped out the gains in after-hours trading during the trading hours on the 24th. This is a reminder of the limits of market upside potential even on a global basis.

 Turning to the Japanese stock market, bank stocks remained steady without being taken down by the downgrade of U.S. regional banks by rating agencies in the U.S. or the decline in long-term interest rates in Japan and the U.S. Stocks related to homebuilding and small construction equipment have also been strong on the back of growth in U.S. housing starts and new home sales. Although the stock price trends of semiconductor-related stocks related to NVIDIA require attention, there is no concern about the growing demand for image processing semiconductors (GPUs) related to generative AI (artificial intelligence). There are also signs that the domain of generative AI will increasingly expand from text-based AI such as “ChatGPT” to image and voice.

 Digital Media Professional (3652), UserLocal (3984), and Parksha Technology (3993) discussed in our Weekly, May 29, 2023 issue, “AI-related Stocks After ChatGPT Launches, Soliton Systems (3040) also merit renewed attention. The Digital Agency also requested 567 billion yen, up 18% from the previous year, for the development and operation of government information systems in its FY2012 budget request. Sakura Internet (3778) and Internet Initiative Japan (3774) are expected to attract attention as “home-grown clouds” from the perspective of economic security.

 Twelve years after the accident at TEPCO’s Fukushima nuclear power plant, the release of treated water from the plant began on March 24. In response, China announced a total suspension of imports of Japanese seafood. While this will be a blow to Japanese fisheries companies and to retailers and restaurants that handle Japanese products in China, one aspect of this could lead to an increase in tourism to Japan by foreigners who want to try authentic sushi and an increase in inbound consumption. The same applies to real estate investment in Japan. If the Chinese real estate recession is prolonged, Chinese people may become more interested in Japanese real estate and may ransack it on their trips.

 The number of “hospice-type residences,” nursing homes specializing in care for patients with terminal cancer or other intractable diseases, is rapidly increasing. Some listed companies such as Anvis HD (7071), Nihon Hospice HD (7061), and C–UC (9158) have emerged. The government is promoting home care instead of hospitalization, which tends to be more expensive, amid a tightening of healthcare finances. On the other hand, there is a lack of end–of–life care facilities. (Sasaki)