Nikkei reverses course to end Monday higher as chip-related shares cut losses

[TOKYO] Japan’s Nikkei share average reversed course to end higher on Monday (Jun 29), as chip-related stocks cut losses after South Korea rolled out sweeping chip and AI mega-projects.

The Nikkei closed 0.15 per cent higher at 69,468.11, after falling as much as 1.97 per cent earlier in the session. The broader Topix rose 0.47 per cent to 3,982.

South Korean President Lee Jae Myung said the world’s two largest memory chipmakers, Samsung Electronics and SK Hynix, would invest some US$520 billion with suppliers to build two new chip fabrication sites in the country.

“What pushed the Nikkei lower were chip-related shares, and what made the Nikkei reverse the loss were also chip-related shares,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.

Memory chipmaker Kioxia narrowed its early loss, ending 4.5 per cent lower. Chip-testing equipment maker Advantest fell 1.51 per cent. Chip-making equipment maker Tokyo Electron rose 2.44 per cent.

Those shares declined in early trade after the Philadelphia SE semiconductor index’s 5.3 per cent fall on Friday. The decline underscores recent volatility among AI-related chipmakers that have fuelled much of Wall Street’s gains in recent years.

On Monday, investors rotated out of AI-related stocks to beaten-down shares, said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

“There was a concern in the market that memory chip prices have risen too much,” he said.

Game maker Nintendo, whose profits have been squeezed by rising memory chip prices, jumped 5.25 per cent, while Sony Group rose 3.13 per cent.

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The fragility of the US-Iran interim peace deal has not become a market-moving cue in Japan, said Yasuda.

Energy-related shares, which typically react positively to war tensions, fell on Monday.

The mining sector lost 1.83 per cent and oil refiners fell 1.07 per cent.

Of the more than 1,500 stocks trading on the Tokyo Stock Exchange’s prime market, 69 per cent rose, 26 per cent fell and 2 per cent traded flat. REUTERS