[NAV Forecast] WCM Next & World's Best: Tech stocks plummet on renewed AI investment concerns, forecast for decline due to sharp Nasdaq drop (Analysis for 10/23)

Good morning, this is TOMMY_JUNE.

In today’s US market, concerns regarding the investment race in artificial intelligence (AI) have reignited, leading to a pullback in the S&P 500 and the Nasdaq Composite. The Nasdaq, in particular, fell sharply by -2.60%, marking its largest decline since June 5. Although the Dow Jones Industrial Average, composed of blue-chip stocks, turned slightly positive (+0.02%) near the close, the market as a whole was heavily weighed down by selling pressure on tech stocks.

Furthermore, on the geopolitical front, crude oil prices (crude oil futures +2.06%) have risen due to escalating tensions in the Middle East, fueling concerns about persistent inflation and the Federal Reserve’s continued interest rate hikes. In the currency market, the dollar/yen pair has shifted toward a stronger yen at -0.87% (156.76 yen), placing strong downward pressure on today’s NAV forecasts for both funds from both stock price and currency perspectives.

1. Summary of NAV Forecasts (Announced 10/23)

These are estimated values based on confirmed market performance overseas. In addition to the significant negative impact from stock price factors, currency factors (a stronger yen) are also acting as a burden, and a large decline is expected, particularly for WCM Next, which has a high weighting in tech stocks.

Note that the forecast for World’s Best reflects the 150 yen dividend payout from today’s ex-dividend date. While it shows a -196 yen change from the previous day, the actual decline is limited.

2. Contribution Analysis (Stock Price Factors)

On a local stock price basis, the market has been soft, centered on tech stocks and capital goods.

■ WCM Next Generation

Top holdings Siemens Energy (-8.56%) and Comfort Systems USA (-8.70%) fell significantly, acting as a major drag on the fund as a whole. Meta Platforms (-6.98%) also plummeted due to AI-related concerns, resulting in a severe outcome where the subtotal contribution of the top 10 holdings was significantly negative (-2.25%).

■ World’s Best

Although Rolls-Royce Holdings (-5.11%) and Microsoft (-2.23%) declined, stocks such as Canadian Pacific Kansas City (+2.86%) and Coca-Cola Europacific (+3.57%) made positive contributions, showing movement that supported the downside of the portfolio to a certain extent.

3. Deep Dive: Factors Behind Notable Stock Movements

I will explain the recent background regarding stocks and sectors that showed particular movement in last night’s market.

• Siemens Energy (ENR) Change: -8.56%

  • [Significant Adjustment of Top Holding] As the largest holding in WCM Next (7.3%), the stock was heavily pressured by the overall risk-off wave in the European market and profit-taking following its recent gains. It plummeted by -8.56%, providing the largest negative contribution of -0.63% to the fund as a whole.

• Comfort Systems USA (FIX) Change: -8.70%

  • [Plunge Due to Spillover of AI Infrastructure Concerns] Having previously attracted buying as an AI infrastructure-related stock for data centers and the like, it was directly hit by today’s “renewed concerns over the AI investment race.” The stock price collapsed by -8.70%, becoming the second-largest downward factor for WCM Next (contribution rate -0.37%).

• Rolls-Royce Holdings (RR) Performance: -5.11%

  • [A Common Burden for Both Funds] Although the company is a top holding in both WCM Next (6.4%) and World’s Best (3.5%), it saw a weak performance of -5.11% due to selling pressure in the capital goods sector, which spilled over from the tech stock sell-off. It is weighing heavily on both portfolios as a common downward factor.

• Coca-Cola Europacific (CCEP) Performance: +3.57%

  • [Flight to Defensive Stocks] Amid a harsh market environment where tech and capital goods stocks were sold off across the board, this company, which is included in World’s Best, bucked the trend with a gain of +3.57%. As capital wary of AI-related volatility moved into the defensive sector, it served as a valuable positive contributor (+0.10%) that supported the floor for the fund as a whole.

4. Summary of the Day: Investment Perspective

Today was a day where the enthusiasm for ‘AI investment,’ which had been the market’s driving force, was dampened, leading to a significant increase in position-adjustment selling, primarily in tech stocks. Rising oil prices against a backdrop of geopolitical risk and concerns over continued interest rate hikes due to low levels of initial jobless claims are also weighing on the market as a whole.

WCM Next was directly hit by the correction in AI/technology-related stocks and the sharp decline in capital goods stocks, resulting in a very difficult outcome in terms of both stock prices and exchange rates. As for World’s Best, although it is down from the previous day, this figure reflects the 150-yen dividend payout, and it is showing relatively firm movement with some defensive stocks supporting the downside.

Through earnings announcements, the market has entered a phase of strictly evaluating the ‘actual returns on AI investment’ for each company. Since indices and funds with a high weighting of tech stocks remain susceptible to impact, it is necessary to monitor the situation while remaining fully vigilant against the high-volatility market environment and the risk of a stronger yen.

TOMMY_JUNE

---

▼ Popular articles on personal portfolios and investment strategies
While following global economic trends, I also write practical articles on personal wealth building (FIRE x dividend-paying funds). I have summarized perspectives for steadily growing cash flow without being deceived by pessimism on social media.

#AssetManagement #InvestmentTrusts #WCMNext #WorldsBest #NAVForecast #FIRE