The Tokyo stock market on Monday, the 25th, saw the Nikkei Stock Average surge 1,819 yen to 65,158 yen, marking a significant consecutive gain. The index reached an unprecedented level above 65,000 yen with consecutive record highs. While the public has begun calling it the "60,000 yen era," the market has already climbed halfway to the summit. Notably, TOPIX also renewed its record high for the first time in three months today. While the global risk-on sentiment continues primarily in AI and semiconductor-related sectors, the market remains an intense roller-coaster ride with extraordinary volatility. When the pendulum vector of buying and selling reverses direction, the amplitude becomes larger than expected, possibly due to the influence of AI trading executing rapid position reversals. In addition to futures, following the trend of AI-driven individual stock strategies has become a key challenge for short-term traders.

Kioxia Holdings <285A> was truly spectacular. Today, Prime Market trading value exceeded 10 trillion yen again, and Kioxia alone accounted for over 2.4 trillion yen, representing approximately one-quarter of the total. Not so long ago, an unwritten rule existed for the former TSE First Section: "whether the market could be considered active depended on whether trading value exceeded 2 trillion yen." The subject that was once the TSE First Section has now been replaced by Kioxia alone, a remarkable testament to changing times. Fujikura Ltd. <5803>, which suffered a crash mid-month, showed an astonishing recovery and hit the daily limit up today, gapping up and breaking above the 75-day moving average. This suggests the current AI market has no scenario for easy capital withdrawal. Fujikura's recovery reflects the turmoil of short sellers operating through the stock lending market. Lasertec corporation <6920>, which opened with a gap-up showing a large bullish candlestick, is also regaining its former momentum.

The dramatic movements of the Nikkei Average tend to draw attention to leading stocks with high trading volumes. However, this does not mean small and mid-cap stocks are left out. Rather, in terms of short-term stock price transformation, numerous issues are delivering performance far exceeding large-cap stocks. In this probability change mode, where sparks constantly fly, once ignition occurs and flames rise, cases of extraordinary surges are increasing.

AKIBA Holdings Co., Ltd. <6840>, which has been continuously covered since last year, has recently entered a literal "pillar of fire mode." At this point, it becomes purely a supply-demand play, and following individual catalysts or fundamentals becomes meaningless. Future Innovation Group, Inc. <4392> follows a similar pattern, shedding its image as a perpetual low-priced stock and suddenly becoming a monster. The trigger was the company's announcement that a group company jointly developed automation equipment for AI semiconductor inspection processes with a Taiwanese company. Speculation that this Taiwanese company might be TSMC pushed the stock price up without question. This reflects less the individual stock's capacity and more the prevailing market environment. When the market enters probability change mode with frequent daily limit-up stocks like today, the stock market becomes tremendous.

However, these remain localized bubbles. For example, no matter how aggressively the Nikkei Average raises its level, the overall P/E ratio remains around 18x, partly due to rising overall EPS. While this exceeds the historical average, it does not harbor risks of immediate collapse. How large the inflated bubble sphere has become won't be known until it bursts, but many still view the current timeframe as being in a safe zone. Market sentiment strongly holds that "bubble collapse cannot occur before the IPOs of SpaceX, OpenAI, and Anthropic" (online securities market analyst), and this view carries considerable conviction.

While identifying small and mid-cap stocks where fuses have been lit is challenging, there are more than a few stocks showing smoke. First, attention should be paid early to "stocks positioned as OpenAI-related." JTP CO.,Ltd. <2488>, with a P/E ratio of 11x, dividend yield of 3.5%, and progressing on a revenue and profit growth trend, is a strong candidate. Additionally, the transformation DNA latent in low-priced semiconductor sector stocks, as proven by AKIBA Holdings' popularity, is also a key point. SAKAE ELECTRONICS CORPORATION <7567>, which has entered a business recovery trend, may create a long-awaited opportunity. Although an electronic components trading company, its dividend-paying status and P/B ratio in the 0.5x range represents undervaluation even by orthodox valuation standards. Among mainstream semiconductor trading companies, MARUBUN CORPORATION <7537> also offers high dividend yield and undervaluation. Additionally, Kioxia-related stocks T&S Group Inc. <4055> and Quest Co., Ltd. <2332> remain in a state where fuses have not yet been lit, making them attractive on dips.

Tomorrow's schedule includes the release of April white goods shipment value during morning trading hours, and the revised March economic indicators index during afternoon trading hours. The Bank of Japan will also publish core consumer price indicators. The May Monthly Economic Report is also scheduled for release. Overseas, the March Federal Housing Finance Agency (FHFA) Housing Price Index and March S&P CoreLogic Case-Shiller Home Price Index will be released simultaneously, and there is high market interest in the Conference Board's May U.S. Consumer Confidence Index. A U.S. 2-year Treasury auction is also scheduled for this day. Among overseas corporate earnings, Chinese comprehensive electronics giant Xiaomi is scheduled to announce results.

Source: MINKABU PRESS

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