Growing concerns over an AI bubble led to capital outflows from the Japanese stock market last week

Odaily Planet Daily News According to data from the Japan Exchange Group, during the week ending May 29, overseas investors net sold approximately 395 billion yen ($2.5 billion) worth of Japanese stocks, ending an eight-week streak of net buying. This sell-off occurred as the tech-heavy Nikkei 225 index broke through the 65,000-point mark for the first time, driven mainly by artificial intelligence-related stocks such as SoftBank, Kioxia, and Murata Manufacturing. The rapid rise of the Nikkei index has sparked concerns among some market participants about overheating, prompting them to take profits.

Pelham Smithers, Managing Director of UK-based equity research firm Pelham Smithers Associates, stated: "More and more people believe that AI is forming a bubble. We estimate that about 70% of the gains in the Japanese stock market in 2026 will come from AI-related stocks." He noted that as cautious sentiment intensifies, some global investors "want to exit Japan and shift funds to markets like Europe, which have a less pronounced AI flavor." (Jin Shi)