Investment Rating - The report does not explicitly provide an investment rating for the consumer electronics sector in Japan Core Insights - The potential for a decline in US consumer spending due to tariff costs being passed on to consumers warrants attention, although there are positives for companies investing in the US [1] - Companies with significant production in China are likely to face the largest impacts from tariffs, particularly in the smartphone and PC categories [2] - Companies aggressively investing in US manufacturing may benefit from tariff policies aimed at reviving the US manufacturing sector [3] - The appreciation of the yen could provide benefits that outweigh the negatives from tariffs for certain companies with low sales exposure to the US [4] Summary by Sections Consumer Spending and Tariffs - There is a risk of decline in US consumer spending as tariffs increase costs for consumer electronics, with global smartphone shipments rising 1.5% year-on-year to 304.9 million and PC shipments increasing 4.9% to 63.2 million [1] Impact of Tariffs on Production - A significant portion of smartphones and PCs are produced in China, while large appliances are primarily made in Mexico. The US has imposed additional tariffs of 145% on China and 10% on other countries, with temporary exemptions for smartphones and PCs [2] Opportunities for US Investments - Companies like Panasonic Holdings and Fujifilm Holdings are making substantial investments in US manufacturing, which may provide them with a competitive advantage over rivals lacking a US presence [3] Currency Effects - Companies with low sales exposure to the US may benefit from yen appreciation, potentially improving their cost of goods sold (COGS) ratios and profits despite tariff impacts [4]

April 16, 2025 04:54 AM GMT China Economics | Asia Pacific Growth to Soften Meaningfully in Q2-Q3 Key Takeaways Strong 1Q on policy front-loading: Key drivers for 1Q growth have been (1) strong infrastructure capex on front-loaded govt bond issuance; and (2) robust sales of consumer goods in trade-in program. Manufacturing capex also edged up in March, likely reflecting revived tech animal spirit. These help offset the moderating exports on fading front-loading and Fentanyl-related tariffs. That said, defla ...

April 14, 2025 05:59 AM GMT China Economics | Asia Pacific Exports Could Slip Below 5%Y in April Key Takeaways Source: China Customs, Morgan Stanley Research Surging exports – not really a surprise… The surprising headline is in line with our view last month that export YoY growth would rebound visibly in Mar, because the soft Jan-Feb reading reflects residual Lunar New Year (LNY) seasonality and the associated drag on labor-intensive exports. Indeed, labor-intensive segments rebounded sharply in Mar on a b ...

Asia utilities and energy Equities Looking for shelters Asia Finding comfort: Asian utility and energy names under our coverage are relatively less impacted by this wave of US tariffs, with the exception of solar equipment (see Asia Solar: US reciprocal tariffs announced, 4 Apr 2025). Hong Kong utilities should continue to demonstrate absolute defensiveness against risks in trades, while FX exposures are mainly translational with their dividend stories remaining in strength and key to relative outperformanc ...