The Must Read PSA Weekly Research Round-up (week to 5 June)
Reports / Flash Notes Summaries
1. The Effect of the AI Theme on Japanese US$1~10bil Market Cap Stocks – And What to Look for Next
In last week’s PSA Weekly Research Round-Up [29 May 2026], we ran an editorial looking at the impact of the AI theme on the Japanese stock market and wondering whether it would actually be up in 2026 were it not for the AI theme. In this report, Pelham Smithers follows up with something similar on small-cap AI plays – specifically stocks with market caps between US$1~10bil.
2. IT Service Sector Still Depressed – Undeservedly So
There have been recent signs of a positive shift in sentiment towards IT Service Sector Stocks under our coverage. However, analyst Lindsay Whipp would argue that considering their recent earnings performance, growth outlooks and AI moats, the sector deserves more love. In particular, we think BayCurrent and Visional look even more attractive than the rest of the sector.
3. Recruit Holdings (6098 JT) – Dispelling AI Threats with Expected FY25~28 OP CAGR of +19.5%
As demonstrated by Recruit’s FY25 results, the company is far from being destroyed by the proliferation of AI services, but rather emerging as a clear beneficiary of the advanced technology. Analyst Thao Nguyen expects OP to rise at 3-year CAGR of over +19%, while valuations are not stretched by the stock’s recent standards.
Industry Insights
Global semiconductor market expected to be worth US$1.5tril in 2026
16Gb DDR5 spot price breaks US$40 level
Video games round-up
Temp agencies under investigation by JFTC
Company Insights: News / Previews & Results
Takeaways from Kioxia’s IR day
Yaskawa MTP modest
SEI hits new listing high
Insights from Computex 2026: read across to JXAM
Fuso Chemical: meeting feedback
Rasa: Results meeting feedback
NEG seeking to supply Apple with its Dinorex glass
Nissan to build cars for Chery in the UK
Mitsubishi Motors’ mid-term plan disappoints
Toyota shares drop on earnings concerns
Yaskawa’s modest MTP
SEI hits new ATH
IHI informative IR day
Sony State of Play underscores strength of Japanese game line-up in 2026
Visional: FY26 Q3 preview
Smaregi FY26 preview
Recruit shrugs off JFTC concerns
PKSHA / Anthropic / Matsuo Lab develop a ‘Japan AI Index’
Macro / Market / Misc.
Corporate profits up but capex flat
Japan plays the “we’ve been nice to you over the years card” in Iran discussions
Wage growth picks up in April
The Weekly Comment by Pelham Smithers
GARP – Growth at reasonable price – is a widely acknowledged investment strategy, and in 2024 we identified it as the winning strategy of the time.
We had wondered whether Japan’s two-speed stock market would provide an opportunity for a GARP comeback, when we realised that we weren’t in a GARP scenario, but a GALP one.
Company / Sector / Thematic Comments at a Glance
Technology: Consumer Electronics, Gaming
1. Video Games Round-Up
2. Sony State of Play Underscores Strength of Japanese Game Line-up in 2026
Technology: Industrial Electronics / Components / Semis & SPE / Precision
3. Global Semiconductor Market Expected to Hit US$1.5tril in 2026
4. 16Gb DDR5 Spot Price Breaks US$40 Level
5. Takeaways from Kioxia Investor Day
Chemicals / Materials
6. Fuso Chemical: Meeting Feedback
7. JX Advanced Metals Shares Rise on Insights from Computex 2026
8. Rasa: Results Meeting Feedback
9. NEG’s Seeking to Supply Apple with its Dinorex Glass
Autos / New Mobility
10. US Auto Sales Stabilise in May
11. Mitsubishi Motors’ Mid-Term Plan Disappoints
12. Toyota Shares Fall on Earnings Concerns
13. Nissan to Build Cars for Chery in the UK
Capital Goods / Machinery
14. Yaskawa MTP Modest
15. IHI Informative IR Day
16. SEI Hits Listing High
Internet / eCommerce
17. Temp Agencies Under Investigation by JFTC
18. Smaregi: FY26 Preview
19. Recruit Shrugs Off Investigation Worries
Enterprise Software / IT Services
20. Visional: FY26 Q3 Preview
21. PKSHA, Anthropic and University of Tokyo’s Matsuo Lab to Jointly Develop A ‘Japan AI Index’
Miscellaneous / Market / Strategy / Macro
22. Corporate Profits +15% YoY but Capex Flat – MOF Business Survey
23. Japan Plays the “We’ve Been Nice to You Over the Years Card” in Iran Discussions
24. Wage Growth Picks Up in April
PSA in the Press
Foreigners Offload Japanese Stocks as AI Bubble Worries Grow – Bloomberg [4 Jun]
Excerpt: “There is a growing sense that AI is becoming a bubble, and we reckon that about 70% of the Japanese stock market gains in 2026 are in AI-ecosystem stocks,” said Pelham Smithers, managing director of UK-based equity research firm Pelham Smithers Associates. Some global investors are “wanting to move away from Japan and put money in less AI-tastic markets like Europe” as caution grows, he said.
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