Written by Brigid Riley
TOKYO (Reuters) – Japan's main stock index broke above the 40,000-point level for the first time on Monday, continuing its rapid rally towards new highs this year on the back of corporate governance reforms and cheap valuations.
Technology stocks soared, following U.S. stocks, and the Nikkei Stock Average rose 0.79% to 40,226.83 yen by midday close, topping Friday's intraday high of 39,990.23 yen.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, said foreign investors appear to be leading the buying spree, and many appear to be investing from a medium- to long-term perspective.
“I think the market will continue to rise,” he said.
Japanese tech stocks were boosted by a continued rally in artificial intelligence in U.S. stocks, which saw the S&P 500 and Nasdaq hit record highs on Friday.
Advantest, a maker of chip testing equipment whose customers include U.S. artificial intelligence company Nvidia, rose 3.9%. Tokyo Electron, a major semiconductor manufacturing equipment manufacturer, rose 2.7%.
Shares of these two companies added 175 index points in morning trading, matching the 316-point rise in the Nikkei Stock Average.
Shin-Etsu Chemical, which makes semiconductor silicon products, rose 2.2%.
JSR Corp, a leading maker of photoresists used in chip manufacturing, is down 4.4% following media reports that government-backed fund Japan Investment Corporation (JIC) plans to launch a tender offer for its shares this month. Rose.
The broader Topix rose 0.16% to 2,713.79.
Among the 33 industries listed on the Tokyo Stock Exchange, electrical machinery rose 1.2%, making it the third-highest riser after pulp and paper (up 2.1%) and mining (up 1.3%).
(Reporting by Brigid Riley; Editing by Sri Navaratnam and Edwina Gibbs)
