[Citi: The Japanese stock market has overreflected the risk of economic recession and is expected to gradually rebound before the end of the year] November 9th, Citigroup believes that the sharp decline in the Japanese stock market in early November has reflected expectations of an economic recession that far exceeds fundamentals, and the market is expected to gradually rebound before the end of 2026. Citigroup estimates that based on the closing price on November 6, the Japanese stock market’s implied earnings per share expectations are about 20% lower than the current market consensus, which is equivalent to a potential drop in overall corporate profits of nearly 30% in fiscal year 2027; the technology sector’s implied earnings drop is more than 50%. Citi pointed out that such a large earnings downward revision usually only occurs during economic recessions, and it does not currently expect Japan or the global economy to enter a recession. Technology stocks only account for about 23% of the Topix Index. Even if their profits are halved, as long as other industries remain stable, it will be difficult to cause overall profits to fall by 30%. Therefore, the current stock price has actually priced in a substantial deterioration in corporate profits outside the technology industry, and the market reaction has been clearly overreacted. Citi believes that although short-term fluctuations may continue, Japanese stocks are expected to recover before the end of the year as pessimistic expectations are revised.