The Tokyo stock market entered June with the benchmark Nikkei Stock Average gaining 604 yen from the previous session to close at 66,934 yen, extending its record-breaking rally. Despite weak Nikkei futures ahead of the bell, the index surged at the open and briefly touched the 67,000 yen mark by mid-morning on unexpectedly robust momentum. Although high valuation concerns prompted healthy profit-taking across broader sectors, market leaders Kioxia Holdings <285A>, SoftBank Group Corp. <9984>, Murata Manufacturing Co.,Ltd. <6981>, and TAIYO YUDEN CO., LTD. <6976> anchored the advance. Declining stocks accounted for 70% of the Prime Market as the TOPIX index drifted lower, widening the NT ratio to the 17x range and highlighting the extreme concentration of capital in the AI and semiconductor themes.

Selective buying continues to expand across the semiconductor ecosystem. While mega-cap, index-weighted shares remain the primary vehicles for institutional inflows, speculative capital is rapidly rotating into small- and mid-cap names, triggering powerful upward breakouts. The ongoing rally in multilayer ceramic capacitor (MLCC) stocks, led by Murata Manufacturing, exemplifies this trend, having spun off from the core AI data center theme to capture the market spotlight.

As investors hunt for the next derivative theme after MLCCs, printed circuit boards (PCBs) are entering a strong momentum cycle. The standout performer in this space is KITAGAWA SEIKI CO.,LTD. <6327>, a global niche-top manufacturer of PCB vacuum press machines. The company is seeing explosive demand for its large-scale vacuum presses used to form copper-clad laminates (CCLs)?a high-layer, high-performance material critical for GPU-equipped AI servers. Although the stock experienced a volatile session today, hitting its daily limit-down after touching a limit-up, its nearly seven-fold surge since early February underscores powerful structural tailwinds. Meanwhile, PCB maker KYOSHA CO.,LTD. <6837> also showed momentum, surging by its 80 yen daily limit-up to touch 410 yen before trimming gains to form an upper shadow.

Looking ahead, ISHII HYOKI CO.,LTD. <6336> warrants close attention among PCB equipment plays. Capturing capital expenditure demand for package substrates, its business model mirrors that of Kitagawa Seiki. Its operating profit guidance for the fiscal year ending January 2027 projects a modest 1.3% increase to 1,155 million yen following a 26% surge in the prior year, a target the market views as highly conservative. CMK CORPORATION <6958> is also worth monitoring as inquiries grow for its high-value-added PCBs; while primarily focused on automotive applications, the company is well-positioned to capture AI-driven demand as a new growth engine.

Capital is also flowing broadly into semiconductor materials. While global market leaders like photoresist manufacturer TOKYO OHKA KOGYO CO., LTD. <4186> and silicon wafer specialist SUMCO CORPORATION <3436> remain core holdings, near-term opportunities are emerging in names like NIPPON KAYAKU CO.,LTD. <4272>. The stock has been consolidating around the 2,000 yen level following a gap-up surge and is poised for another leg up, driven by growing demand for its epoxy resins used in semiconductor encapsulation. Additionally, JAPAN MATERIAL Co.,Ltd. <6055>, which supplies specialty gas equipment and serves as a prominent Kioxia-related play, continues to log higher lows despite near-term volatility.

For value-driven capital, HARIMA CHEMICALS GROUP, INC. <4410> looks deeply undervalued on a PBR and dividend yield basis; the company utilizes rosin to manufacture conductive pastes with excellent thermal conductivity for next-generation power devices. Similarly, New Japan Chemical Co., Ltd. <4406> offers deep value around the 200 yen level with a PBR in the 0.3x range, backed by strategic potential in its acid anhydride for photosensitive polyimide (PSPI). Looking to tomorrow's economic calendar, Japan will release its May monetary base and fiscal funds private sector balance alongside a 10-year JGB auction, followed by Fast Retailing's May Uniqlo domestic same-store sales after the close. Globally, investors will monitor Eurozone preliminary May HICP data, the U.S. April JOLTS report, Poland's central bank rate decision, and earnings from Palo Alto Networks , while the Malaysian market will be closed.

Source: MINKABU PRESS

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