In today’s briefing:
- Ohayo Japan | Tariff Rumour Chaos
- Japan Morning Connection: US Relief Rally Sending JP Futures Sharply Higher
- Capex Monetization: Revenue Impact, Margin Expansion Across Companies
- Where Are We Now? Index Valuations, Earnings Expectations, Where the Bottom Could Be?
- Tariff: New World Order?
- Tech Talk: US Tariffs – Possible Impacts on Covered Companies
- Japanese Big Cap Banks – Trump’s Trade War Headwinds
- Monday Delight: 07/04/25
- The Impact of Trump’s Tariffs on China Healthcare – The Victims, And the Safe Haven Assets
- What’s New(s) in Amsterdam – 7 April (dsm-firmenich | Shell | InPost | B&S Group | TomTom)
Ohayo Japan | Tariff Rumour Chaos
- US stocks ended a volatile session mixed Monday as trade tensions dominated headlines. The S&P 500 slipped 0.2% for a third straight loss
- Brief hopes of a tariff pause lifted markets midday, but the White House denied the rumor, reigniting uncertainty
- Oasis Management, a Hong Kong-based activist, disclosed a 5.93% stake in en Japan, acquiring 2.95 million shares for 5 billion yen
Japan Morning Connection: US Relief Rally Sending JP Futures Sharply Higher
- The horse trading continues with Israel bowing to the US and bilateral talks with Japan set to commence imminently.
- US shippers outperformed given lower oil despite an outlook for lower global trade overall.
- Samsung numbers beating this morning on strong demand for the Galaxy S25 smartphones and DRAM.
Capex Monetization: Revenue Impact, Margin Expansion Across Companies
- Several companies across industries have commissioned capacity expansions. These completions reflect management’s strong demand outlook and are often precursors to improved financial performance and long-term value creation.
- The completion of strategic Capex enhances revenue streams and EBITDA margins, positioning companies for sustainable growth, improved financial performance, and greater investor confidence amid evolving market demands.
- Tracking newly completed capacities helps identify companies entering growth mode. As utilization improves and integration lowers costs, earnings visibility strengthens, supporting upgraded forecasts and potential valuation upside.
Where Are We Now? Index Valuations, Earnings Expectations, Where the Bottom Could Be?
- The S&P and Nasdaq corrections are already large at -20% and do imply an earnings recession. But these corrections started from elevated valuations level.
- A 15% earnings decline in 2025 on typical recession valuations multiples (-1 standard deviation) implies another -20% downside.
- This is a time to be patient, wait for a policy inflection or a bottom to markets – both can take months.
Tariff: New World Order?
- The logic behind the tariff is not just a slap in the face for a lot of other nations but also net imports over exports.
- Companies benefitting from the globalization will suffer, and the ones with domestic-centric businesses with real assets in proximity may be less hurt.
- This could accelerate the forming of new trading bloc that may change the current world order.
Tech Talk: US Tariffs – Possible Impacts on Covered Companies
- Tariffs are the talk of the town in tech. As of April 5, there will be a universal 10% tariff on all goods imported into the US.
- President Donald Trump also declared that foreign trade and economic practices have created a national emergency, and his order imposes a reciprocal tariff designed to match the import taxes countries currently have on US products.
- Technology products could see significant tariffs as the reciprocal tariff hits a number of countries.
Japanese Big Cap Banks – Trump’s Trade War Headwinds
- Global macro hurdles following “liberation day” have hit Japanese banks’ share prices hard; global recession risks are on the rise and BoJ monetary policy normalization is at best delayed
- With investors betting on the safe haven of Japanese government bonds, the JGB yield curve has flattened since March-end which adds to the Japanese banks’ hurdles
- Despite maintaining our constructive medium to long term view on Japanese banks, we expect challenges in the near-term and we would reduce long exposures to Resona, Mizuho, SMFG and Shizuoka
Monday Delight: 07/04/25
- Each week, I’ll share five intriguing investment ideas that recently caught my attention. These ideas are meant to spark your research and help you kickstart the week ahead with fresh insights.
- Because these ideas are the result of my first-level idea generation process, they require more in depth research. Therefore, the ideas will often be concise, with occasional references to valuable work from other practitioners that I encourage you to explore.
- If you have something fascinating to share that could benefit me and the wider community, don’t hesitate to send it my way—I’d love to hear from you!
The Impact of Trump’s Tariffs on China Healthcare – The Victims, And the Safe Haven Assets
- APIs, generic drugs, CXO, low-end medical consumables will be hit the most due to tariffs.Investors are advised to be cautious on these subsectors as companies’ performance would be negatively affected.
- As the tariff war is heating up, blood products, innovative medical device, innovative drugs, chain pharmacies, innovative medical services, pharmaceutical distribution business could be “safe haven assets” for investors.
- The logic behind tariffs is to attack China’s effective supply and trigger China’s overcapacity problem, thereby weakening effective demand and reducing capital accumulation rate, so as to attack the RMB.
What’s New(s) in Amsterdam – 7 April (dsm-firmenich | Shell | InPost | B&S Group | TomTom)
- According to Bloomberg, several private equity parties are looking at a possible takeover of dsmfirmenich ‘s animal feed division.
- CVC Capital Partners, Apollo, Bain Capital and Lone Star are among those interested.
- dsm-firmenich announced last year that it would be divesting the division.
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