Nikkei Drops 4% as SoftBank Plummets on OpenAI IPO Delay

SoftBank

Japan’s Nikkei share average closed 4% lower on Friday, erasing most of the gains from the previous session, as tech investor SoftBank Group tumbled more than 12% following a report of a delay in OpenAI’s initial public offering. The Nikkei fell 4.15% to close at 69,360.88. In the previous session, the benchmark index experienced an increase of 4.6%, culminating in a record high close. The index experienced a decline of 2.65% over the course of the week. The broader Topix closed 1.32% lower at 3,963.36, marking a 2% decline for the week.

Technology investor SoftBank, whose share price has been bolstered by CEO Masayoshi Son’s investment in OpenAI, experienced a decline of 12.53%. Source reported on Thursday that OpenAI is contemplating postponing its public debut until next year, according to three individuals familiar with the company’s discussions. “The news was negative for SoftBank Group as well as overall investors as AI is the centre of the market and the market wondered if there was anything negative in the industry outlook,” stated Shuutarou Yasuda. Other AI-related heavyweights experienced declines, with shares of Advantest down 9.64% and Tokyo Electron down 3.21%, respectively.

Memory maker Kioxia 285A experienced a decline of 11.24%. The sharp decline in the Korean benchmark KOSPI, which triggered circuit breakers for the second time this week, also hurt investor sentiment, according to Naoki Fujiwara. Strategists anticipate that the rally in the Nikkei will persist, as investors are likely to expand their focus towards AI data center and chip-related stocks. “AI and chip-related shares have been volatile in recent sessions, but in the long term, their stock prices will be firm, supported by solid earnings,” stated Chizuru Morishita.

“The AI-boom has brought an industry revolution, not just a temporary trend,” she added. Bucking the trend, Toyota Motor gained 0.9% and bank shares rose, with Mizuho Financial Group and Sumitomo Mitsui Financial Group rising more than 0.8% each. Among the over 1,500 stocks listed on the prime market of the Tokyo Stock Exchange, 58% experienced an increase, 39% saw a decline, and 2% remained unchanged.