Japan's Nikkei ends near three-week low as AI-stock selloff weighs

[TOKYO] Japan’s Nikkei share average closed at a near three-week low on Wednesday (May 20), with SoftBank Group leading the decline, as investors locked in profits on AI-related stocks that had powered the market’s recent rally.

The Nikkei slipped 1.23 per cent to 59,804.41, its lowest close since May 1. The index ended lower for a fifth consecutive session. The broader Topix declined 1.53 per cent to 3,791.65.

Market participants sold shares that had driven the Nikkei to record highs earlier this month, according to Kazuaki Shimada, chief strategist at IwaiCosmo Securities.

“But this is an appropriate adjustment of Nikkei’s reliance on a small group of shares.”

The Nikkei had reached an all-time high of 63,799.32 on May 14.

Among the biggest laggards, technology investor SoftBank Group tanked 6 per cent on Wednesday and chip-making equipment maker Tokyo Electron lost 2.25 per cent.

Fibre optic cable maker Fujikura fell 8.25 per cent, extending losses for a fifth consecutive session after reporting fiscal 2028 operating profit below market expectations.

Fujikura, a supplier of materials used in AI data centres, had been one of the standout performers in the Nikkei’s recent rally.

“When Fujikura is sold, investors sell other technology stocks,” Shimada explained.

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Shares of Advantest, a supplier for Nvidia, bucked the trend and ended 1.32 per cent higher.

Meanwhile, Ube Corp surged 20.92 per cent to become the Nikkei’s top percentage gainer after the cement maker announced plans to increase dividend payouts.

Of the roughly 1,600 stocks traded on the Tokyo Stock Exchange’s prime market, 81 per cent fell, 16 per cent advanced and 1 per cent traded flat. REUTERS