Japan Equity Strategy Market Explorer: Tech adjustment in final phase, bull market to continue

Research evidence excerpt

Japan Equity Strategy Market Explorer: Tech adjustment in final phase, bull market to continue

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30 Jul 2026 02:35:23 ET │ 24 pages

Japan Equity Strategy Market

Explorer

Tech adjustment in final phase, bull market to continue

Ryota Sakagami AC

CITI'S TAKE +81-3-6776-4653

ryota.sakagami@citi.com

Japanese tech stocks entered a major correction from late June, with the

Nikkei falling sharply from its highs. However, high-beta sectors such as Keishi Ueda

banks and autos have performed well, and TOPIX tracked sideways, +81-3-6776-5110

indicating risk aversion has not intensified across the overall market. keishi.ueda@citi.com

Multiple valuation indicators suggest that the tech stock correction has

progressed considerably, and unless accompanied by profit deterioration, Sector Analysts

additional downside appears limited. With no major changes to the longer- Arifumi Yoshida

term growth story surrounding AI and data center investment, we maintain

our view that a tech-led bull market will resume toward year-end. Yuta Nishiyama

Takayuki Naito

Japanese equities remain fundamentally sound despite tech correction — While

the Nikkei has corrected significantly, led by tech stocks, TOPIX has remained Takero Fujiwara

resilient. High-beta sectors such as banks, financials, and autos have gained, and

capital shifts into defensive sectors were limited, suggesting market movements Masahiro Shibano

differed from typical risk-off phases. We believe this confirmed the strength of the

Hiroki WatanabeJapanese equity market, which has multiple investment themes beyond AI-related

stocks, including entrenched inflation and corporate governance reform. Tokiya Baba

Tech correction approaching final phase — The MSCI Japan IT forward PER and Moriya Koketsu