On August 5, the Japanese stock market triggered the circuit breaker mechanism multiple times, with the Nikkei index closing down 12.40%, entering a technical bear market. Morgan Stanley believes that global economic recession fears, along with the hawkish stance of the Bank of Japan's monetary policy, have led to sharp declines in the strong-performing Japanese stock and currency markets this year. Additionally, Asian stock markets experienced large declines, with Asian semiconductor and equipment stocks retracting, and the US dollar falling significantly against the Japanese yen. Given the possibility of further market decline in the short term, it is recommended to adopt a more defensive investment strategy and shift from semiconductor stocks to essential consumer goods stocks. Morgan Stanley points out that due to the lack of key economic data releases in the coming weeks, as well as upcoming G7 and China policy meetings, concerns about global economic growth remain high. As carry trades on the yen are unwound further, the yen is expected to rise to 140 against the US dollar, leading to more outflows from semiconductor stocks. Morgan Stanley states that with market positions still leaning towards the high side and valuations high, cumulative performance of Japanese stocks is still considered ideal. They do not recommend buying Asian semiconductor stocks at a low, but if the US economy can achieve a soft landing, the sharp drop in Japanese stocks could bring opportunities. Morgan Stanley remains optimistic about Japan's nominal economic growth, currency reflation, and corporate reform themes.