Chips, chips, and more chips (needed!)

Tian Xuan Zhou (Oliver)
Bachelors Student, New European College – Munich

Asia market

Japan. Turning this into an asia market section because I am currently loving the Japanese exposure. Nikkei has been the top performing major index this year so far. Not only has the snap election been a major success for leader Sanae Takaichi, the Japanese market has also been buying into this.

Note that Sanae Takaichi has been the favourite by the street even in the previous election that Ishiba has won, due her ultra dovish stance compared to Ishiba’s traditional conservative view.

The weakening of the Yen should be very good for the carry trade therefore I am expecting (already) huge exposure of institutions back into the Japanese market already. Naturally because of the dovish stance, financials should outperform, so MUFG 8306. Other than financials, tech and especially semi and manufacturers due to the weaker Yen comes to mind as ideas.

China. Despite headwinds, the economy met its 2025 growth target of 5%, although Q4 growth of 2025 slowed down to 4.5%, its weakest in three years. The CPI read did not provide much positive sentiment either, with January 2026 CPI at ~0.2% YoY, below expectations and signaling the very weak consumer price pressures that are constantly lingering.

• Home appliance. Still the obvious long because of government support. Haier Smarthome 6690HK, +5% since last coverage showing a very steady uptrend forming higher lows. TCL Electronics 1070HK, this is the big one, +19% since last coverage and +36% since initial coverage. Strongly event driven by a strategic partnership to establish a joint venture that will take over Sony’s home entertainment business.
• E-commerce. PDD hit my stop loss. Just very weak in general. CPI reading was very disappointing. I think exposure should be minimal until further clarification of any government support. Volume is also very weak, from HKEX filings mostly showing southbound buying and lack of institution activity.
• Xiaomi 1810HK. Also disappointing but I disagree. Sure, smartphone shipments are down. Xiaomi has also reduced the number of new phone models released… to focus on profitability. Revenue and margins are still growing substantially and perhaps the set of results next month can reignite the amazing run that they had last year. Also the EV arm has been delivering without flaws, with the YU7 overtaking Tesla’s model Y in China sales in January. Furthermore, the company has doubled down on its decision to intensify its share buy back program which is providing much needed support for stock prices recently. I love the confidence from management, so I am still very much buying into them, maybe not at the moment. Seems like there is some sort of pressure to break through 37.5, however to me it seems like a bottom has been formed on February 5th. My target price for them still remains at 60, strong buy it the next weeks or so.

US market

The doubt is back and this time, crypto is crashing down. Although I am not a believer in crypto, I have some concerns due to speculation stocks, which I have much reduced the exposure to, all bets are off, but not to the “sell America” agenda yet. Rather, hedge America. And this is not new, options volume has broadly elevated since last year. With VIX currently spiking, it is important to protect downside with such volatility. Also straddle/strangle strategies come to my mind.

I also have some new ideas and names, much connected to the chip shortage and data centers. Lam research and Eaton/Vertiv.

First of all, Lam research, a semiconductor equipment and component supplier who designs and manufactures equipment used to fabricate semiconductor wafers. Their components are critical for chip etching, depositioning and the cleaning and wafer process, to which they sell to chip manufacturers like TSMC, Samsung and Intel. Insiders have also disclosed a lot of stock buying filed in February. Stock price was hammered last month which seems like a good buying opportunity, YTD already +35%.

The latter is about cooling technology for data centers. Who would’ve thought putting massive data centers together that requires so much energy to power needs cooling? Very obvious but not mainstream enough I feel. I like Eaton a little more since Vertiv’s performance has been nothing less than spectacular. Maybe Eaton has a little catch up in stock price to do, but I like both.

• Financials; Charles Schwab mainly which I still think was a good trade. Until AI disruption fears in the wealth management sector. That was rather unexpected to me. I think it was a little harsh but sold off.
• Intel; Wow, got the results and price action spot on. Intel took a massive hit on results day, -17%, before slowly recovering to the high 40s. Was really happy with this one all week however did reduce exposure due to the new AI concerns.
• Novo Nordisk; Very weak 2026 guidance, but didn’t form a lower low than the 14th November last year. I actually thought the results were pretty good. Revenue and EPS for full 2025 came in above expectations. Sales grew at about 10% CER and adjusted earnings beat consensus estimates for the quarter. Margin and EBIT/EBITDA data should be very important (stating the obvious once again good job). Interested to see if they are able to offset this US weakness from sales outside of the US. Buying back into Novo.
• Aerospace and Quantum computing; Speculative stocks, no more exposure.