In today’s briefing:
- DATA CENTER SECTOR: From the Tip of the Spear to Canary in the Coal Mine
- Asian Equities: Till Debt Do Us Part
- Monday Macro Update: War Scenario Remains On Track If the U.S. “Officially” Rejects Tehran’s Plan
DATA CENTER SECTOR: From the Tip of the Spear to Canary in the Coal Mine
- DC company share prices are rolling over, foreshadowing increasing pressure on their hyperscaler customers. Since the July swoon in semiconductor stocks, the DC sector has underperformed both hyperscalers and semiconductors.
- DC players face strong headwinds on multiple fronts, including high leverage/circular financing, supply chain delays, public opposition, and questions about aggressive forecasts of future compute demand.
- Leverage is the most prominent risk in the DC sector, with questions looming about completion dates and customers’ ability to meet their contracted offtake agreements.
Asian Equities: Till Debt Do Us Part
- In a world of surging interest rates, highly leveraged markets, sectors and stocks are more vulnerable than unleveraged ones. The former set will have skyrocketing capital costs dampening their profitability.
- China (86% net debt-equity in 2025), Thailand (105%) and Philippines (118%) are the most leveraged Asian markets. The least leveraged are Taiwan (54%), India (65%), Indonesia (66%) and Korea (68%).
- Thai telecom, Philippines transportation, Philippines energy, Korean distribution services, Philippines telecom, Indonesian transportation are the most-leveraged market-sectors. Singapore health technology, Indonesian commercial services, Taiwan energy, Indonesian industrials are the least-leveraged.
Monday Macro Update: War Scenario Remains On Track If the U.S. “Officially” Rejects Tehran’s Plan
- It would appear that our scenario in terms of a U.S.-Iran deal remains intact, i.e. “we will believe it when we see it.”
- President Trump has apparently rejected Iran’s “seven day” timeline for what essentially appears to be an effective reiteration of the original MOU, strongly supported by the IRGC.
- President Trump also suggested, as anticipated, that a “re-escalation” of military strikes is possible, but his timeline, at least at this point, is after the midterms, but we shall see.
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