Japan Specialist

Mark Chadwick

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>We are not fighting the trend with all the MSCI global indexes (MSCI ACWI, EAFE, ACWI ex-US, and EM) hitting multi-year highs, but we are monitoring a few potential concerns</li>
<li>Concerns: notably global Consumer Staples (KXI-US) near 5.5-month RS highs, crude oil prices bottoming, and gasoline prices (UGA) breaking out from a 3.5+ year downtrend</li>
<li>Actionable Themes: Energy, Materials, Transports, Real Estate, Telecom, and Utilities. Remain Overweight Emerging Markets, Taiwan, Korea, Spain, Japan, and Canada</li>
</ul>


We are not fighting the trend with all the MSCI global indexes (MSCI ACWI, EAFE, ACWI ex-US, and EM) hitting multi-year highs, but we are monitoring a few potential concerns
Concerns: notably global Consumer Staples (KXI-US) near 5.5-month RS highs, crude oil prices bottoming, and gasoline prices (UGA) breaking out from a 3.5+ year downtrend
Actionable Themes: Energy, Materials, Transports, Real Estate, Telecom, and Utilities. Remain Overweight Emerging Markets, Taiwan, Korea, Spain, Japan, and Canada


Opportunity in Global Cyclical Value and Defensives: Energy, Materials, Real Estate, Telecom, Utes

<ul>
<li>PM Sanae Takaichi's administration is steering Japan towards a more assertive role in the Indo-Pacific, backed by a week of high-profile diplomatic and defence announcements</li>
<li>Defence Minister Shinjiro Koizumi's meeting with US Defence Secretary Pete Hegseth at the Pentagon this week underscored the durability of the Japan-US alliance</li>
<li>Nvestor appetite for Japanese equities has strengthened on expectations that a decisive electoral mandate will unlock defence spending, infrastructure investment, and corporate reform</li>
</ul>


PM Sanae Takaichi's administration is steering Japan towards a more assertive role in the Indo-Pacific, backed by a week of high-profile diplomatic and defence announcements
Defence Minister Shinjiro Koizumi's meeting with US Defence Secretary Pete Hegseth at the Pentagon this week underscored the durability of the Japan-US alliance
Nvestor appetite for Japanese equities has strengthened on expectations that a decisive electoral mandate will unlock defence spending, infrastructure investment, and corporate reform


Japan Strategy Weekly | Blending Soft Charm with Hard Resolve

Pan-Asia Tactical Market Calls (Quant-Driven), MRM Research

Nico Rosti

Pan-Asia Tactical Market Calls (Quant-Driven)

MRM Research

Quantitative Research

Equity Derivatives

<ul>
<li>The <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> has been trending up for 3 weeks (including this week), our model flagged it as 'overbought'. Wall Street/Tokyo brokerages maintain medium-to-long-term bullish trajectories</li>
<li>Index rebalance will be official from October 1st: added Capcom, Kokusai Electric, and JX Advanced Metals, removing Archion, Konica Minolta, and Kanadevia.</li>
<li>The price-weighted index has been tilted further toward semiconductors, advanced manufacturing, tech growth, driving institutional flows into chip suppliers. Higher yields and potential further rate hikes present persistent headwind risk.</li>
</ul>


The Nikkei 225 (NKY INDEX) has been trending up for 3 weeks (including this week), our model flagged it as 'overbought'. Wall Street/Tokyo brokerages maintain medium-to-long-term bullish trajectories
Index rebalance will be official from October 1st: added Capcom, Kokusai Electric, and JX Advanced Metals, removing Archion, Konica Minolta, and Kanadevia.
The price-weighted index has been tilted further toward semiconductors, advanced manufacturing, tech growth, driving institutional flows into chip suppliers. Higher yields and potential further rate hikes present persistent headwind risk.


Nikkei 225 (NKY INDEX): Tactical Outlook Post Index Rebalance (Pullback Forecast)

Global Materials | Industrials | Commodities

Rahul Jain

<ul>
<li>Precious and energy-transition metals lead as structural scarcity, central-bank demand, and electrification support gold, silver, copper, aluminium, zinc, and rare earths into 2026.</li>
<li>Bulks and hydrocarbons lag with weak China demand, oversupply, and compressed margins across iron ore, nickel, steel, coal, and crude, keeping the segment firmly underweight.</li>
<li>Top Asia exposures include Zijin, Korea Zinc, Hindustan Zinc, Vedanta, CMOC, JXAM, SMM, Mitsui, Jiangxi Copper, NALCO, Hongqiao, Hindalco, Shenghe, and CNRE.</li>
</ul>


Precious and energy-transition metals lead as structural scarcity, central-bank demand, and electrification support gold, silver, copper, aluminium, zinc, and rare earths into 2026.
Bulks and hydrocarbons lag with weak China demand, oversupply, and compressed margins across iron ore, nickel, steel, coal, and crude, keeping the segment firmly underweight.
Top Asia exposures include Zijin, Korea Zinc, Hindustan Zinc, Vedanta, CMOC, JXAM, SMM, Mitsui, Jiangxi Copper, NALCO, Hongqiao, Hindalco, Shenghe, and CNRE.


Asia Metals Outlook 2026: Scarcity Favours Gold, Copper, Aluminium

Japan

JX Advanced Metals Corporation mines and distributes non ferrous metal products. The Company smelts, refines, and markets non ferrous metals such as copper, gold, silver, and more. JX Advanced Metals also sells semiconductor materials, special steel materials, and other products.

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JX Advanced Metals (5016 JP)

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

Opportunity in Global Cyclical Value and Defensives: Energy, Materials, Real Estate, Telecom, Utes

Opportunity in Global Cyclical Value and Defensives; Actionable Themes: Energy, Materials, Transports, Real Estate, Telecom, and Utilities....

Vermilion Research

Japan Strategy Weekly | Blending Soft Charm with Hard Resolve

Japan under PM Sanae Takaichi is taking a more assertive stance in the Indo-Pacific, with high-profile diplomatic and defence moves. Investor...

Mark Chadwick

Nikkei 225 (NKY INDEX): Tactical Outlook Post Index Rebalance (Pullback Forecast)

The Nikkei 225 rallying on tech gains, but our model indicates a short-term overbought condition. We expect a 1-2 week pullback, details are...

Nico Rosti

Asia Metals Outlook 2026: Scarcity Favours Gold, Copper, Aluminium

Precious and energy-transition metals set to outperform bulks and hydrocarbons through 2026, with top Asia exposures including Zijin, Korea Zinc,...

Rahul Jain

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Opportunity in Global Cyclical Value and Defensives: Energy, Materials, Real Estate, Telecom, Utes

Opportunity in Global Cyclical Value and Defensives; Actionable Themes: Energy, Materials, Transports, Real Estate, Telecom, and Utilities....

Vermilion Research

Japan Strategy Weekly | Blending Soft Charm with Hard Resolve

​Japan under PM Sanae Takaichi is taking a more assertive stance in the Indo-Pacific, with high-profile diplomatic and defence moves. Investor...

Mark Chadwick

Nikkei 225 (NKY INDEX): Tactical Outlook Post Index Rebalance (Pullback Forecast)

The Nikkei 225 rallying on tech gains, but our model indicates a short-term overbought condition. We expect a 1-2 week pullback, details are...

Nico Rosti

Asia Metals Outlook 2026: Scarcity Favours Gold, Copper, Aluminium

​Precious and energy-transition metals set to outperform bulks and hydrocarbons through 2026, with top Asia exposures including Zijin, Korea Zinc,...

Rahul Jain

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

Japan under PM Sanae Takaichi is taking a more assertive stance in the Indo-Pacific, with high-profile diplomatic and defence moves. Investor...

Precious and energy-transition metals set to outperform bulks and hydrocarbons through 2026, with top Asia exposures including Zijin, Korea Zinc,...