Japan First to Market: How long will the AI correction last? Japanese equities enter oversold territory

J.P. Morgan's "Japan First to Market" daily summarizes the latest Japan views. Since the October 6 peak, an AI infrastructure pullback—driven by concerns over funding and returns, credit anxiety around neo-cloud providers, and rising Brent crude (above US$100/bbl) amid Middle East tensions—has hit global equities: TOPIX -5%, Nikkei 225 -11%, Nikkei Semiconductor Index -26%, leaving Japanese equities oversold. The quant strategy sees 62,000 as the Nikkei bottom and 60,980 as a key threshold, flagging European unrest and rising bond yields. At the sector and stock level, the team is bullish on Zensho ahead of Jul-Sep results and positive medium-term on Asics and FOOD & LIFE; Taisei and Kajima face four-month business suspension orders (Nov 7, 2026-Mar 6, 2027) over the Chuo Shinkansen bid-rigging case with limited earnings impact; Kawasaki Kisen sharply raised guidance on containers and dry bulk, lifting FY recurring profit by ¥55.0bn to ¥190.0bn;