Daily Brief Thematic (Sector/Industry): Ohayo Japan | Soaring Yields Sink Stocks and more

• A weak 20-year Treasury auction spooked markets; Stocks tumbled as the Dow fell 800 points
• Orbis Investments increased its stake in Tsuruha Holdings to 10.29%; opposes Tsuruha’s planned business integration with Welcia
• Wolfspeed Stock down over 60% as prepares for bankruptcy. Potential impact on wafer supply to Renesas?

• Semiconductor industry expected to grow by 10%
• US semiconductor manufacturing expansion faces challenges
• Trump and China agree to a 90-day pause on new tariffs, with uncertainty about future outcomes

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• YTD, the Rmb has appreciated by 1.3% against the USD, reversing the 2.8% depreciation in 2024. The gainers in FY24 may now turn to losers, and vice versa.
• The top 5 gainers in FY24 are Shangri-La Asia (69 HK), Singamas Container (716 HK), China Everbright Env (257 HK), BYD Electronics (285 HK), and China Education Group (839 HK). 
• The FY24 losers, and potential FY25 gainers, are Air China (753 HK), China Southern Airlines (1055 HK), China Eastern Airlines (670 HK), CNBM (3323 HK), and H World (1179 HK). 

• Tech and semis sharply lower as investors go risk off, although Coreweave bucks the trend to jump another 19%.
• Infineon buoyed sentiment for power semi’s somewhat after announcing tie up with NVDA for HVDC data center systems.
• Expect a rough ride for Home builders and construction related plays such as Sumitomo Forestry and Shin Etsu.

• In early May, we had the opportunity to meet with executives from leading companies in the semiconductor industry in Taiwan.
• We found that investment in technology research and development is a common key factor behind their success, allowing them to stay ahead of the curve and achieve superior profitability compared to their peers.
• Moreover, having a diversified production base gives these companies the flexibility to withstand severe negative impacts from trade conflicts. 

• The WTR Sustainable Index was up 5.9% W/W versus the S&P 500 Index (up 5.3%), the Russell 2000 Index (up 4.5%), and the Nasdaq Index (up 6.8%).
• Energy Technology (12.6% of the index) was up 10.4%, while Industrial Climate and Ag Technology (47.4% of the index) was up 5.4%, ClimateTech Mining was up 2.9%, and Advanced Transportation Solutions (21.7% of the index) was up 6.9%.
• Top 10 Performers: FL, AEVA, SPI, MVST, ACHR, LIS, SMR, TGEN, CLIR, TPIC

• The tariff pause that refreshes? The administration’s decision to pause some tariffs during negotiations helped the broader market and residential furnishings stocks, but not the office furniture or home goods retailers.
• The WTR Commercial/Contract Furniture Index declined 1.8% and the Home Goods Retailers Index fell 1.5%, while the residential Manufacturers & Suppliers Index rose 1.1%. The large-cap indices were up 2.0%, while the R2K rose 1.0%.
• Ask not for whom the bell tolls, it tolls for thee. References to GenAI in the press and social media continue to grow rapidly (1), as shown in Figure 1

• Large pharma’s bounce from the mostly ineffective Most- Favored-Nation (MFN) executive order was short-lived, as new CMS draft guidance for Medicare price negotiations threatened certain drug combos.
• President Trump’s MFN executive order lacked a clear plan to lower drug prices, with any immediate moves likely facing legal challenges.
• Listen to the WTR Biotech Flashcast for our MFN take.