Trading Company Sector "A turning point for cyclical ideas" Goroh

Research evidence excerpt

Trading Company Sector "A turning point for cyclical ideas" Goroh

Global Research

29 June 2026ab

Trading Company Sector Equities

JapanA turning point for cyclical ideas

Mining & Metals

Harunobu Goroh

Earnings forecast and price target update; top pick Sumitomo Corp. (8053, Buy) Analyst

Our investment stance on the trading company sector is neutral. While signs of harunobu.goroh@ubs.com

stabilisation in the Middle East situation have finally emerged, the scenario of interest +81-3-5208 6215

rates remaining high due to inflation alert is becoming increasingly realistic. The idea of Lihui Huang

pursuing upside in commodity prices, which have risen on the back of liquidity supply Analyst

under financial easing conditions , will likely pause. Heading into Q1 results, we believe lihui.huang@ubs.com

that share prices have already factored in steady progress in earnings relative towards +81-3-5208 6217

guidance driven by external cyclical factors, such as rising energy prices and yen

depreciation (particularly for stocks with high price sensitivity).

For the trading company sector, we expect multiple re expansion driver would shift to

individual factors (instead of out side conditions), such like realisation of investment

returns, evolution of business models, and acceleration of asset turnover (: from

acquisition/holding models to utilisation/rotation models), and the company which has

capability to make upward shifts in ROE levels through and their intent to suppress CoE

through reduction in individual risk premiums and beta control, could be the focus

name. Our top pick is Sumitomo Corporation (8053), for which strategic shifts have

started through accelerating asset turnover and an increasing weighting of immediate