2026 Mid-Year Outlook June Update – Retain Capex versus Consumer Preference with Japan as Core OW

研报英文原文证据摘录

2026 Mid-Year Outlook June Update – Retain Capex versus Consumer Preference with Japan as Core OW

FoundationM

Higher Targets at Mid-Year – Still Seeking a Robust Approach for an Uncertain World

• In last month’s mid year outlook we raised our base case EM and TOPIX targets moderately to reflect another 6 months

of earnings growth, while holding our multiple assumptions unchanged.

• That said, we view the current environment as exceptionally uncertain due to the combined effect of AI capex and

disruption, Energy price volatility and a more uncertain path for the Fed. We therefore continued to set unusually wide bear

to bull target price spreads.

• Japan has broader estimate revisions than EM with multiple sectors/stocks exposed to core MS themes and leveraged to

PM Takaichi’s agenda.

• We are constructive on North Asia (particularly Japan but also Korea & Taiwan) versus South Asia (India, Australia, Asean

ex Singapore), prefer Brazil versus the rest of Latin America, and prefer Greece, Hungary & Saudi Arabia versus the rest of

EEMEA.

• We are EW China which remains in deflation with weak aggregate earnings revisions due to continued deflationary forces

although valuations are low. We prefer A-shares to H-shares and emphasize capex over consumption.

• Overall our focus lists are geared to Capex versus Consumer & Goods versus Services, and concentrated in Semis /

Memory, Tech Hardware, Industrials / Cap Goods, Materials and Energy. We are negative on Autos, Consumer & IT services

including E-commerce, and downstream industries impacted by higher commodity prices.

• In general, we view the rally in EM as cyclical rather than the start of a new secular bull market.