Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Japanese equities are rotating beneath the surface as financials surge and duration-heavy sectors lag, signalling an emerging sensitivity to higher domestic rates.</li>
<li>Inflation persistence and rising JGB yields are pushing markets to price a more hawkish Bank of Japan, despite soft consumer conditions.</li>
<li>The AI trade is becoming more valuation-sensitive as earnings volatility meets higher cost-of-capital expectations, with NVIDIA as the near-term catalyst.</li>
</ul>


Japanese equities are rotating beneath the surface as financials surge and duration-heavy sectors lag, signalling an emerging sensitivity to higher domestic rates.
Inflation persistence and rising JGB yields are pushing markets to price a more hawkish Bank of Japan, despite soft consumer conditions.
The AI trade is becoming more valuation-sensitive as earnings volatility meets higher cost-of-capital expectations, with NVIDIA as the near-term catalyst.


Thematic (Sector/Industry)

<ul>
<li>As AI shifts from software hype to hardware reality, hyperscalers plan $650–750 billion in 2026 capex for infrastructure, boosting upstream hardware suppliers.</li>
<li>Japan's Nikkei has outperformed globally (+13% YTD vs. Nasdaq's decline), driven by strong gains in materials and semiconductor equipment firms tied to the AI supply chain.</li>
<li>Prime Minister Takaichi's landslide election victory fuels optimism for pro-growth policies; markets reacted positively with equity rallies, yen strength, and falling yields.</li>
</ul>


As AI shifts from software hype to hardware reality, hyperscalers plan $650–750 billion in 2026 capex for infrastructure, boosting upstream hardware suppliers.
Japan's Nikkei has outperformed globally (+13% YTD vs. Nasdaq's decline), driven by strong gains in materials and semiconductor equipment firms tied to the AI supply chain.
Prime Minister Takaichi's landslide election victory fuels optimism for pro-growth policies; markets reacted positively with equity rallies, yen strength, and falling yields.


Japan Strategy Weekly | The Global Hardware Store for the AI Era

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong, Europe, Germany, and China.</li>
<li>Our preferred Sector overweights continue to be defensives (Utilities, Staples, and Health Care) and commodity Sectors (Energy and Materials).</li>
<li>The secular bull market in commodities (Bloomberg Commodity index, WTI and Brent crude oil, etc.) remains intact, which continues to support our overweight recommendations on the Energy and Materials Sectors.</li>
</ul>


Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong, Europe, Germany, and China.
Our preferred Sector overweights continue to be defensives (Utilities, Staples, and Health Care) and commodity Sectors (Energy and Materials).
The secular bull market in commodities (Bloomberg Commodity index, WTI and Brent crude oil, etc.) remains intact, which continues to support our overweight recommendations on the Energy and Materials Sectors.


Still Bearish at the Index Level; Remain Overweight Defensives & Commodity Sectors

Asia Pac ECM and Index Rebal, DZT Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Feb 13th. The aggregated net margin trading position is USD23,203m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Shin-Etsu Chemical, SoftBank, Advantest, Kioxia, Mitsubishi Heavy Industries, Fujikura, Mitsubishi UFJ Financial, Recruit, Disco, Fast Retailing, Shin-Etsu Chemical, Softbank, Advantest.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Feb 13th. The aggregated net margin trading position is USD23,203m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Shin-Etsu Chemical, SoftBank, Advantest, Kioxia, Mitsubishi Heavy Industries, Fujikura, Mitsubishi UFJ Financial, Recruit, Disco, Fast Retailing, Shin-Etsu Chemical, Softbank, Advantest.


JPX Margin Trading Weekly (Feb 13th): Shin-Etsu Chemical, SoftBank, Advantest, Kioxia

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.</li>
<li>This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.</li>
<li>This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.</li>
</ul>


As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.
This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.
This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.


2022 JPX Nikkei 400 Rebal Update - Going the Right Way

Japan

Dexerials Corporation manufactures and sells optical materials, electronic parts and adhesive materials.  The Company produces optical disks, magnetic tapes, magnetic devices, optical film, and touch panel.

Price Gauge
52-week Range	0.00 - 0.00
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Dexerials Corp (4980 JP)

Japan Strategy Weekly | Regime Change?

Japanese equities are reacting to rising domestic rates, with financials surging and AI trade becoming more valuation-sensitive, led by NVIDIA.

Mark Chadwick

Japan Strategy Weekly | The Global Hardware Store for the AI Era

Hyperscalers plan massive capex for AI infrastructure, boosting hardware suppliers; Nikkei outperforms on strong gains in AI supply chain, &...

Mark Chadwick

Still Bearish at the Index Level; Remain Overweight Defensives & Commodity Sectors

Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong,...

Vermilion Research

JPX Margin Trading Weekly (Feb 13th): Shin-Etsu Chemical, SoftBank, Advantest, Kioxia

We analyzed JPX margin trading positions report for the past week and highlighted Shin-Etsu Chemical (4063 JP), SoftBank (9984 JP), Advantest (6857...

Ke Yan, CFA, FRM

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Strategy Weekly | Regime Change?

​Japanese equities are reacting to rising domestic rates, with financials surging and AI trade becoming more valuation-sensitive, led by NVIDIA.

Mark Chadwick

Japan Strategy Weekly | The Global Hardware Store for the AI Era

​Hyperscalers plan massive capex for AI infrastructure, boosting hardware suppliers; Nikkei outperforms on strong gains in AI supply chain, &...

Mark Chadwick

Still Bearish at the Index Level; Remain Overweight Defensives & Commodity Sectors

Our outlook remains bearish at the index level as downtrends remain intact on the MSCI broad global indexes and also within Japan, Hong Kong,...

Vermilion Research

JPX Margin Trading Weekly (Feb 13th): Shin-Etsu Chemical, SoftBank, Advantest, Kioxia

We analyzed JPX margin trading positions report for the past week and highlighted Shin-Etsu Chemical (4063 JP), SoftBank (9984 JP), Advantest (6857...

Ke Yan, CFA, FRM

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

Japanese equities are reacting to rising domestic rates, with financials surging and AI trade becoming more valuation-sensitive, led by NVIDIA.

Hyperscalers plan massive capex for AI infrastructure, boosting hardware suppliers; Nikkei outperforms on strong gains in AI supply chain, &...