Report by Yuka Marosek

Yuka Marosek sees early signs that investor attention may be broadening beyond the Nikkei’s AI/semiconductor winners but does not have strong conviction that broad TSE Growth outperformance will persist. Instead, her preferred strategy is to target smaller “picks-and-shovels” companies exposed to Japan’s autonomous-driving and MaaS commercialisation cycle. The theme is gaining substance as driver shortages, deregulation and government subsidies push autonomous mobility from demonstration into deployment. Yuka argues the disciplined approach is to accumulate essential supply-chain names while speculative capital chases the large-cap theme. Aisan Technology stands out fundamentally, as does eSOL, while Fixstars and Tier IV remain watchlist names for a better entry point after recent strength.

Technology

Report by Arete Research

The memory cycle is being misread as cyclical rather than structural, with no near-term earnings peak as AI drives sustained demand. Capacity cannibalisation from HBM and SOCAMM is expected to constrain DRAM supply into 2028, with NAND also remaining tight, while LTAs could see future output effectively prepaid - reducing downside risk and reinforcing earnings durability. Yet valuations remain anchored to legacy frameworks, underestimating pricing power and cash generation, with net cash potentially >50% of m/cap by FY27 for players like SK Hynix and Kioxia. Within memory, Arete sees NAND fundamentals as more compelling than DRAM in the near term. They also upgrade Samsung to Buy, with a continued beat-and-raise cycle expected in coming quarters.

Technology

Report by Propitious Research

Improving global market positioning whilst still trading at a discount to peers - SK Hynix trades on a 7.2x forward PE ratio despite commanding a strong position in the DRAM market and gaining significant market share in NAND over the last year (surpassing Western Digital, whilst Micron and Intel have also lagged). Following the completion of the first phase of its Intel NAND acquisition, SK Hynix should be the #2 manufacturer globally, edging out Kioxia (in which SK Hynix owns a 15% stake). Given the strong pricing environment Wium Malan believes consensus forecasts look very conservative.

Asset Allocation

Report by Entext

The Toshiba private equity offer and Hitachi’s ongoing corporate reinvention highlights the significant upside in Japan if balance sheets are managed more aggressively. Given the China geopolitical threat the Toshiba deal looks politically doable alongside a likely bid by Micron for NAND maker, Kioxia, which will further boost activist ambitions in the country. With the weak JPY offsetting a cyclical rally, Japan’s share of the MSCI AC is down to under 7% (despite an accelerating buyback and ROE trend) - as US share peaks, this could double within five years.