Growing concerns over AI bubble, Japanese stocks faced capital outflows last week

Odaily Planet Daily News According to data from the Japan Exchange Group, in the week ending May 29, overseas investors net sold approximately 395 billion yen (equivalent to $2.5 billion) in Japanese stocks, ending eight consecutive weeks 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 AI-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 equity research firm Pelham Smithers Associates, said: "There is a growing perception that AI is forming a bubble, and 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 caution increases, some global investors "want to exit Japan and channel funds into markets like Europe, which have a less pronounced AI theme." (Golden Ten)