Is the Nikkei telling the full story of Japan’s equities?

The Nikkei Stock Average’s recent record surge has caught investors’ attention, but the TOPIX may offer a clearer picture of the underlying conditions in Japan. Semiconductor-related stocks and the easing of geopolitical tensions have boosted equity market gains, although tensions remain elevated. The TOPIX, however, is well below its high from February, and may more accurately reflect the Japanese equity market. The Nikkei’s recent surge does not necessarily reflect broad-based gains in Japanese equities but rather a sector-driven move led by semiconductor-related names. As a price-weighted...