Core Viewpoint - The upcoming Japanese Senate election poses significant uncertainty for the ruling coalition, with potential implications for market volatility and stock performance as various polls indicate a risk of losing majority seats [1][2][4]. Group 1: Election Impact on Market - Historical data suggests that when the ruling party loses majority seats in the Senate, the stock market typically declines [2]. - The scale of the ruling coalition's loss will directly influence market reactions, with different scenarios outlined based on the election outcome [9]. - If the ruling coalition maintains its majority, Prime Minister Kishida will continue to govern, but the stability of the House of Representatives remains in question [9]. Group 2: Political Stability Concerns - There is a notable concern regarding the potential resignation of Prime Minister Kishida if the ruling coalition loses its majority, which could lead to a more fluid political situation [4][5]. - The probability of Kishida stepping down by 2025 is perceived as significant, reflecting deep market concerns about political stability [5]. Group 3: Corporate Governance Challenges - The election outcome may challenge corporate governance reforms, as left-wing parties oppose current reforms and right-wing parties call for stricter regulations [10]. - Key issues include proposals for increased taxes on large corporations and high-net-worth individuals, as well as a reevaluation of shareholder-focused governance models [10]. Group 4: Trade Negotiations and Economic Policy - The Senate election results will also impact the ongoing U.S.-Japan tariff negotiations, with the ruling coalition likely to avoid making concessions during the election period [11][12]. - If the ruling coalition remains in power, clarity on tariff negotiations may emerge post-election; however, significant changes in government could delay agreements further [13].

Group 1 - The Ninety One Global Strategy Fund - Asian Equity Fund has increased its allocation to Samsung Electronics, reflecting a positive outlook on the company's potential despite its current underperformance compared to competitors like SK Hynix [1][2] - The fund has achieved a 15% return this year, outperforming 94% of its peers, as the South Korean KOSPI index has risen nearly 30%, making it one of the best-performing stock indices globally [1] - Fund manager Charlie Linton believes that many investors have mispriced Samsung due to its lag in the high bandwidth memory (HBM) chip market, but anticipates that the next generation of DRAM chips will help Samsung catch up [2] Group 2 - Samsung's stock has increased by 20% this year, while SK Hynix's stock has surged nearly 60%, indicating a significant performance gap [2] - Linton's team employs a model to screen stocks in the Asian region based on various factors such as quality, valuation, operational performance, and technical momentum, aiming to select stocks that can withstand market volatility [2] - The fund's positive stance on Samsung is partly due to its attractive valuation, as Linton notes that almost all investors are underweight on Samsung [2]