In today’s briefing:
- The Defence and Security Spend Supercycle
- Ohayo Japan | Nvidia Revenue +106% Year-On-Year
- Why Indian Private Sector Large Cap Banks Are Not Performing?
- India: Defense Privatization | Nod to Transfer Missile Technology to Private Firms
- Singapore Market Roundup (26-Aug-2026): UOB Kay Hian downgrades DBS to ‘hold’, maintains ‘buy’ on
- The Perishable Rack: AI Capex as an Inventory Cycle
- Exencial Morning Charts – 26-08-2026
- States Push Back on Data Center Projects; US Military De-Escalation Calms Oil Markets
- Asia Real Estate Tracker (26-Aug-2026): AGP plans $10.4B data centre in Queensland.
The Defence and Security Spend Supercycle
- Defence and security spending has shifted from a cyclical budget item towards a multi-year commitment, while the scope of funded activities has expanded beyond traditional military platforms.
- Four structural forces support this transition: (1) multi-year commitments across NATO and the European Union that raise the spending floor; (2) a broader definition of security that includes cybersecurity and critical infrastructure protection; (3) supply-chain resilience that makes supplier location an increasingly important qualification criterion; and (4) rising electronics and software content across modern platforms.
- Together, these trends extend the opportunity beyond defence primes to the technology and industrial suppliers represented in Singapore’s listed market.
Ohayo Japan | Nvidia Revenue +106% Year-On-Year
- Nvidia delivered $96.2bn revenue (+106% YoY), with Data Center revenue up 117%, and guided Q3 revenue to $108bn.
- This reinforces the earnings momentum behind Japan’s AI-linked semiconductor and equipment names.
- The Nvidia numbers validate the rationale behind Kioxia’s >¥1tn new-fab investment
Why Indian Private Sector Large Cap Banks Are Not Performing?
- PSU bank credit growth exceeded private-bank growth in FY25 for the first time in more than a decade. Between FY22-FY26, private-bank share fell 14.5 percentage points in home-loans.
- Asset quality has converged sharply. Competitive advantage is moving from provisioning relief to funding, pricing, distribution and the ability to deploy capital at an acceptable return.
- The sector trade is no longer simply “private quality versus PSU risk.” One must distinguish volume share, absolute profit share, sustainable ROA and the valuation paid for each.
India: Defense Privatization | Nod to Transfer Missile Technology to Private Firms
- Yesterday, the Defense Minister of India, Mr. Rajnath Singh, announced approval for technology transfer of conventional missiles to private companies to bolster India’s self-reliance in defense development and manufacturing.
- This will provide private companies access to technologies developed by DRDO for conventional missiles enabling them to manufacture indigenously subject to applicable qualifications, certifications and regulatory requirements.
- Conventional missiles like Astra air-to-air missiles, Nag anti-tank guided missiles and Akash air defense missiles are a vital set of India’s modern warfare weapons.
Singapore Market Roundup (26-Aug-2026): UOB Kay Hian downgrades DBS to ‘hold’, maintains ‘buy’ on
- UOB Kay Hian downgrades DBS to ‘hold’ and keeps ‘buy’ rating on OCBC.
- UOBKH’s Tang cuts Huationg’s target price to 88 cents due to rising fuel costs.
- RHB’s Yeo keeps Nam Cheong rating at ‘buy’ with a $2.05 target price.
The Perishable Rack: AI Capex as an Inventory Cycle
- Compute Is Perishable Inventory: racks earn nothing merely plugged in, and unallocated GPU hours expire immediately. Hyperscaler returns hinge on billable utilisation before chip obsolescence erodes installed fleets’ residual values.
- Accounting Masks Capital Exposure: disclosed off-balance-sheet commitments exceed $3.1 trillion. Useful-life extensions and lease reclassifications reduce reported headline capex without lowering actual cash outlays, obscuring true infrastructure intensity.
- Quality of Demand Is Shifting: Multi-year RPO backlogs offer duration visibility, not locked-in returns. With compute futures launching, spot-to-contract spreads and post-trial enterprise conversion will reveal true marginal capacity yield.
Exencial Morning Charts – 26-08-2026
- The goods trade gap widened again in the June quarter
- India apparel export share is still stuck near 4 percent
- Diesel above 5 dollars a gallon is squeezing US farmers
States Push Back on Data Center Projects; US Military De-Escalation Calms Oil Markets
- Residential electricity price spike shines a light on data center power usage.
- Residential electricity prices rose sharply across much of the US between 2021 and 2025, with a meaningful number of utilities recording compound annual growth rates well above general inflation.
- The Electric Power Monthly report published by the Energy Information Administration shows that US average residential electricity rates increased 6.1% per year during 2021-2025 and has jumped another ~9% so far this year (Figure 1).
Asia Real Estate Tracker (26-Aug-2026): AGP plans $10.4B data centre in Queensland.
- AGP plans to invest a substantial $10.4 billion in a new data center campus located in Queensland.
- OUE is pursuing the privatization of its healthcare division, which has an estimated value of $175 million.
- Blackstone’s IPO for Horizon Industrial Parks has experienced flat performance despite raising $271 million.
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