2026 Mid-Year Outlook July 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 July 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 May’s mid-year outlook, we raised our base-case EM and TOPIX targets moderately to reflect another six 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 and Taiwan) versus South Asia (India, Australia,

Asean ex Singapore), prefer Brazil versus the rest of Latin America, and prefer Greece, Hungary and 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 vs. Consumer and Goods vs. Services and concentrated in Semis/Memory,

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

including e-Commerce, and downstream industries affected by higher commodity prices.

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