Brutal Selloff Skims Froth From Japan’s $6 Trillion Stock Market

-- Japanese equities shed $1.1 trillion in value as they kicked off August with a record three-day loss. For bullish investors, that’s providing a fresh reason to buy what has been one of 2024’s hottest trades.NYC Subway Riders See ‘Exceptionally High’ Air Pollution

The benchmark Topix is down 12% since the end of June. Stocks that had outperformed earlier in the year have suffered more. An MSCI Inc. gauge of the nation’s semiconductor-related stocks — whose AI-fueled surge was a key driver of this year’s rally — has fallen 25% in that span. A measure of banks, which had surged on anticipation of higher rates, is down 16%.“I wouldn’t call it a bubble but the market just got carried away,” said Toru Yamamoto, chief strategist at Daiwa Asset Management Co.

“People felt the market was rising a bit too much last month” but with the selloff it “came back to where it should be,” said Masayuki Murata, general manager of balanced portfolio investment at Sumitomo Life Insurance Co. At current valuations, “you could say we are at bargain-hunting levels.” The Nikkei Volatility Index, Japan’s version of the “fear gauge” closed at 45 Friday. While that’s down from the intraday spike of 85 on Monday, it’s still well above the long-term average around 22.

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