The Tokyo stock market saw a sharp rebound on the 14th, with the Nikkei average surging 1,374 yen to 57,877 yen. While risk-averse sentiment dominated European trading the previous day, the tide turned during U.S. hours. U.S. tech stocks showed resilience, with semiconductors standing out. The Nasdaq Composite extended its winning streak to nine sessions, while the Philadelphia Semiconductor Index (SOX) also advanced for a ninth straight day, breaking above the 9,000-point level for the first time and hitting fresh record highs. The Tokyo market followed the risk-on momentum from higher U.S. equities, staging a dramatic recovery that more than tripled the previous day's losses.

Although U.S.-Iran peace talks in Islamabad broke down late last week, reports suggesting possible renewed direct negotiations this week kept short sellers at bay. Sensing this hesitation, overseas hedge funds initiated futures buying, triggering a short squeeze and accelerating the shift to bullish sentiment.

In the Strait of Hormuz, the Trump administration has enforced a counter-blockade to eliminate Iranian influence, creating difficulties for China, which backs Iran behind the scenes. What began as an Israel-Iran confrontation increasingly resembles a U.S.-China proxy war. However, the market anticipates that U.S. and Chinese interests will eventually find common ground. Even if this Middle East crisis subsides temporarily, the threat of mini-stagflation driven by soaring oil prices could cloud corporate earnings prospects, though markets are not currently pricing in such risks.

The semiconductor sector has regained the spotlight, partly driven by defense demand. Amid the AI and semiconductor boom, investment capital is flowing not into AI model development but into "strategic materials" like semiconductors that underpin the infrastructure. While AI technology advances rapidly, the industry's competitive landscape remains opaque, with numerous strong contenders but no clear near-term winners. Regardless of who emerges victorious, physical infrastructure will be essential, positioning semiconductors and peripheral equipment for massive business opportunities.

In this context, AI data centers?essentially semiconductor aggregates?have become the symbol of infrastructure for the generative AI era. Alongside optical devices such as fiber and connectors, capacitor manufacturers have emerged as the next major destination for rotating funds. Capacitors, crucial for charge storage, signal control, and noise reduction, will clearly benefit from the data center boom. Notably, Murata Manufacturing Co., Ltd. <6981> rose 4.3% to 4,349 yen on the 14th, hitting a fresh all-time high for the first time in about a month and a half. Other capacitor makers also rallied: Nippon Chemi-Con Corp <6997> surged to new highs for the first time in six weeks, while Nichicon Corp <6996> showed a clear recovery trend despite being relatively subdued.

Similar to the initial surge in memory-related stocks led by Kioxia Holdings, excess liquidity is swirling around AI data centers. Capital is flowing into capacitor stocks, and with the trend still young, it warrants medium-term attention. Shizuki Electric Co Inc <6994> deserves particular focus. The company's phase-advancing capacitors have expanding applications in data center power equipment. Backed by strong earnings momentum, its operating profit is forecast to jump 23% for FY3/26, approaching record highs. Technically, the stock has breached the daily Ichimoku cloud, and recapturing the March 11 high of 1,205 yen appears likely, signaling entry into blue-sky territory. Additionally, Nippon Kodoshi Corp <3891>, a niche leader with an estimated 60% global share in capacitor separators, seems poised to attract renewed attention.

Meanwhile, perovskite solar cells?a strategic material where Japan leads globally and a priority for the Takaichi administration?cannot be overlooked. Sekisui Chemical Co., Ltd. <4204>, an industry pioneer, announced the commercial launch of its "SOLAFIL" perovskite solar cell on March 27. This marks an epoch-making development for the sector. Among related stocks, Fujipream Corp <4237> looks attractive around the 400 yen level, while Chemipro Kasei Kaisha, Ltd. <4960> warrants renewed attention. Chemipro Kasei holds the top domestic share in UV absorbers and is leveraging its organic synthesis technology to develop materials that improve perovskite solar cell efficiency.

Tomorrow's schedule includes the release of February machinery orders before the market opens, a Japan Securities Dealers Association press conference in the afternoon, and closely watched March foreign visitor arrivals data after the market close. Overseas, attention will focus on the U.S. March import/export price index, April NY Fed Manufacturing Index, April NAHB Housing Market Index, the Fed's Beige Book, and February Treasury International Capital (TIC) data. Separate appearances by Fed Vice Chair Bowman and Fed Governor Barr will also draw scrutiny. Corporate earnings include Q1 results from Bank of America and Morgan Stanley. The Thai market will be closed.

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.