SoftBank Soars 5% Amid Easing Rate Fears, but BOJ Hike Looms

SoftBank Group's share price jumped over 5% in Tokyo on Friday as technology stocks rallied, driven by easing fears of another US interest rate increase. The Nikkei 225 index rose 1.8% to 69,523.56. SoftBank's valuation is closely tied to its AI assets, including Arm and OpenAI.

The company's net asset value surged from ¥40 trillion at the end of March to ¥72.3 trillion at the end of June, thanks to gains in Arm and Intel. However, July's market correction pushed NAV back down to ¥58.3 trillion by August 5.

Lower US rate expectations can support expensive technology assets, but investors are also becoming increasingly confident that the Bank of Japan will tighten again in September. This could create currency risk for SoftBank, as a stronger yen would reduce the value of its dollar-denominated overseas assets and remove part of the currency tailwind that helped the company during the yen's decline.

Citi analysts have taken a hawkish view, forecasting the BOJ policy rate to reach 2% by the end of 2027. Goldman Sachs has also warned that risks are skewed towards an earlier rate increase.