Japan's April-June performance outlook: The AI-driven market has experienced mini rotation, and the importance of profitability has become more important. Pay attention to the sect
J.P.
J.P. Morgan's Japan strategy report points out that with the arrival of the April-June earnings season, the Japanese stock market may experience a "mini rotation" from AI themes to earnings performance. The key change is that the decline in crude oil and other raw material prices will significantly benefit sectors such as electricity and gas, transportation and logistics, raw materials and chemicals, and these sectors are expected to raise their profit expectations. Meanwhile, food, automobiles, defense and banks are also seen as having potential for upward earnings revisions. The logic behind it is that the market's enthusiasm for AI hype needs to be supported by actual profit data, and cost reductions can quickly translate into profit elasticity for some downstream industries. The market may have previously focused more on AI export companies, while ignoring the value restoration opportunities in domestic demand and cost-beneficial sectors. One-sentence conclusion: The Japanese stock market is experiencing a return from "AI narrative" to "profit reality". The cost dividend brought by falling oil prices will become a catalyst for some sectors to increase profits, and the industry rotation is starting. Positive/negative: Positive for cost-benefiting sectors such as Japan's electricity and gas, railway transportation, chemicals, and food. It will be negative for pure AI-themed targets that have experienced excessive early growth (if performance falls short of expectations). The market's enthusiasm for AI may mask a neglect of traditional cycles and the recovery of earnings in the consumer sector. Catalysts: 1) The April-June financial reports and full-year guidance of major Japanese companies verify the industry distribution of upward earnings revisions; 2) The continued trend of international oil prices is the key to whether the logic of cost reduction can be continued; 3) The pace of the Bank of Japan's (BOJ) subsequent normalization of monetary policy.