Japan is the ultimate Halo trade
#Halo trade #Japanese stocks #AI disruption #Asset-heavy companies #Portfolio resilience #Industrial strategy #US-Japan partnership
📌 Key Takeaways
- Japan's asset-heavy companies are now seen as resilient to AI disruption
- Japan's industrial breadth, once criticized, is now viewed as advantageous
- Japanese specialty materials makers are gaining pricing power in AI-related industries
- The US-Japan industrial partnership is strengthening with large collaborative projects
📖 Full Retelling
Investors and financial analysts are increasingly recognizing Japan's stock market as the ultimate 'Halo trade' in February 2026, as global uncertainty accelerates with the rapid advancement of artificial intelligence, making Japanese companies with heavy assets and low-obsolescence credentials suddenly attractive for portfolio weatherproofing. The Halo trade refers to investment in companies with supposed resilience to AI-induced disruption, characterized by substantial physical assets and businesses that don't quickly become obsolete. Japan's market, once criticized for maintaining too many 'zombie companies' and resisting outsourcing, now appears strategically positioned as these very characteristics provide insulation against the disruptive waves of technological change. Strategist Pelham Smithers notes that Japanese companies, which historically scored poorly on standard investor return metrics, are now attracting attention due to 'the weird effect AI is having on both the economics of manufacturing and the destruction of moats in services.' The Japanese industrial landscape, with its average company exposed to 2.3 sectors compared to 1.5 for US and European peers, has maintained a broad set of industrial skills that is now highly valuable. This breadth of coverage, once seen as foolhardy, has positioned Japanese companies as compelling partners for American re-industrialization efforts, exemplified by the massive gas turbine facility under the US-Japan tariff deal that will likely depend on Japanese machinery and expertise.
🏷️ Themes
Financial Markets, AI Revolution, Industrial Strategy, Investment Trends
📚 Related People & Topics
Industrial policy
Government strategy promoting industrial development
Industrial policy is proactive government-led encouragement and development of specific strategic industries for the growth of all or part of the economy, especially in absence of sufficient private sector investments and participation. Historically, it has often focused on the manufacturing sector,...
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Japan is the ultimate Halo trade on x (opens in a new window) Japan is the ultimate Halo trade on facebook (opens in a new window) Japan is the ultimate Halo trade on linkedin (opens in a new window) Japan is the ultimate Halo trade on whatsapp (opens in a new window) Save Japan is the ultimate Halo trade on x (opens in a new window) Japan is the ultimate Halo trade on facebook (opens in a new window) Japan is the ultimate Halo trade on linkedin (opens in a new window) Japan is the ultimate Halo trade on whatsapp (opens in a new window) Save Leo Lewis Published February 26 2026 Jump to comments section Print this page Stay informed with free updates Simply sign up to the Japanese business & finance myFT Digest -- delivered directly to your inbox. However shortlived it turns out to be, the Halo trade is doing some heavy lifting in these confused and confusing times. Snappy acronyms can give the impression of coherence, even when it’s in short supply. For now at least, the investment quest for companies with heavy-asset, low-obsolescence credentials is on. The AI revolution is moving more rapidly than was recently assumed, and the business of weatherproofing portfolios at such a pace, and with the storm still very much overhead, is acutely challenging. It might be less so, however, if Japan is given a chance to prove itself as the ultimate Halo play. It’s a market unexpectedly canonised by the current turmoil: much that once struck investors as ungodly — from the sustenance of zombie companies to resisting outsourcing — suddenly looks redeemed. A good dollop of faith is required. The picks-and-shovels chase seeks dependable winners. The attack on software and services has punished the most likely losers. The case for Halo, as distinct from either of these, makes investment heroes of non-losers: companies with supposed resilience to the crashing waves of AI-induced disruption. The superficial version of this is old-fashioned US defensives — supermarkets, foodmakers, fa...
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