Investing.com -- UBS told investors in a note Monday that it maintains an "Attractive" view on Japanese equities despite a sharp increase in market volatility, arguing that valuations have become more appealing following the recent pullback. A note from UBS's Chisa Kobayashi and Daiju Aoki highlighted that the Nikkei 225 fell 5.8% on Friday, while the TOPIX declined 3.9%, as the Nikkei Volatility Index rose to 40, a level UBS said has been exceeded only 4.0% of the time since the index's inception in 2001. The bank noted that historical data show "the average six-month return following periods when the Nikkei VI surpassed 40 has been above 10% for both the TOPIX and the Nikkei 225." Much of the recent volatility was attributed to spillover effects from Korea's KOSPI, given similarities in index composition, with semiconductor-related stocks representing 38% of the Nikkei 225. Related articlesBuy the dip in Nikkei as valuations look attractive after recent pullback: UBSBurry covers half of his Oracle short bet2 Buy calls, 1 Hold: Mizuho launches coverage on three Big Oil stocks