Daily Brief Thematic (Sector/Industry): Ohayo Japan | WHO >>> Stargate and more

• U.S. announces withdrawal from WHO, citing mismanagement; Focus now on Stargate and AI Healthcare. 
• Technology shares led the advance, with Oracle and Nvidia jumping 6% and 4% respectively, boosted by Trump’s $500 billion “Stargate” AI initiative announcement.
• SoftBank Group and OpenAI have commenced construction on the “Stargate Project” in Texas. Initial investments of $100 billion will fund large-scale data centers 

• Big gains in the US semi and DC related should translate into continued upside in Japan despite some BIG gains yesterday.
• Wire and cable plays are all surging, yet the smaller side of the sector underperforms. Nidec good risk/reward into numbers.
• HAMR rollout helping Seagate higher should also help memory/HDD component plays.

• Jordan Schneider joins Ben Beharon and Jay Goldberg on the podcast Moments to discuss China restrictions drama and semiconductor manufacturing equipment controls
• They discuss the impact of the new rules on companies like Nvidia and the potential unintended consequences, such as increased regulation for startups and new challenges for cybersecurity
• Schneider also highlights the importance of the US government’s export control regime in shaping the future of AI innovation and competition between the US and China

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• Food Empire to remain focused on core business while planning for diversification in the near future.
• HSBC raises Singtel’s target price in anticipation of telecom industry consolidation, showing confidence in the company’s performance.
• Analysts expect strong 2H2024 earnings for PropNex and increase target price, with no cooling measures on property market anticipated.

• SGX IO Futures rose USD 6.75/ton, closing at USD 104.15/ton, driven by strong Chinese economic data and bullish sentiment.
• SGX IO Futures Feb contract trades 19.4% below its last 5-year average (USD 128.93/ton).
• SGX IO futures typically rise before CNY, tapering off 10 days after. Exceptions include 2024’s pre and post CNY decline and extended rallies in 2021 & 2022 before sharp drops.

• Highlight the potential windfall for Indian pharma due to Trump’s “China Plus One” strategy. Emphasize how shifting US supply chains away from China could create significant opportunities for Indian manufacturers.  
• Focus on Trump’s conflicting goals of boosting domestic manufacturing while lowering drug costs. This inherent tension could benefit Indian generic companies as they offer affordable alternatives.  
• Emphasize the uncertainty surrounding Trump 2.0’s healthcare agenda. This ambiguity keeps investors on edge, creating an opportunity to present insightful analysis and predictions.

• Furniture and furnishings stocks moved sharply higher, as a small-cap rotation on top of generally positive sentiments dominated trading, in what is likely an anticipation of economic gains from the new administration’s policies.
• The Water Tower Research Commercial/Contract Furniture Index was up 5.2%, the Residential Manufacturers & Suppliers Index was up 7.2%, and the Home Goods Retailers Index was up 4.0%, while the large- cap indexes gained 2.7% and the R2K was up 3.8%.
• ARHS noted (1) its 4Q24 comps sales were up 6%, reversing the “low single-digit declines” seen in October.

• We stick with Brazilian exchange B3 as our core value pick; it has a growing share of data revenues, its post-trade revenues are understated and equity fee pressure is easing
• We keep Hong Kong Exchange as a buy, with its high share of post-trade revenues; HKEx shares have been highly volatile, but they represent relative value combined with growth potential
• Philippines Stock Exchange (PSE) and BSE are new additions to our coverage of EM exchanges with PSE being one to watch; MexBolsa is deep value, but lacking a re-rating catalyst

• M&A and preannouncements led biopharma headlines last week, with nearly $20 billion in deals fueling some positive sentiment, but disappointing updates from LLY (4Q GLP-1 sales miss) and MRNA (lowered 2025 guidance) weighed on the group.
• CMS released the next set of Medicare drugs for price negotiations, with NVO’s GLP-1 drugs classified as a single agent.
• JNJ confirmed its ITCI bid, while LLY acquired Scorpion and GSK bought IDRx.