SQUEEZE (558A) closed up 5.09% today at 5,780 yen. The catalyst was Hulic's (3003) announcement of a capital and business alliance. Hulic is acquiring an additional stake of about 5% from existing shareholders, raising its total ownership. The goal is digital transformation in hotel operations. As a first step, the two companies are converting an office building in Ginza into an apartment hotel, with opening planned for spring 2028. I wrote about SQUEEZE before. Here is that piece.

Financial media often link the rise in copper prices to the AI trade. Data center construction and AI capital spending are usually cited as the reason. The chart below suggests the picture is more complicated. Copper (COMEX HG) rose 115.2 percent between October 2016 and March 2022. This was before the AI trade took hold. From March 2022 to September this year the increase has been a more moderate 36.2 percent. When looking at copper price moves, it helps to look beyond AI headlines. Basic supply and demand balances and inventory levels matter too. A few points worth watching. Shifts in China's demand mixState Grid's spending on transmission and distribution upgrades.Domestic output and export volumes for solar, wind and EV related goods. Constraints on the supply sideTreatment and refining charges near historic lows.Declining ore grades and disruption risk at major mines in Chile and Peru, including Cobre Panama.Lead times for new mine development, typically over fifteen years. Infrastructure renewal and macro conditions in the US and EuropeGrid modernization and renewable interconnection needs.Real interest rates in dollar terms, along with visible inventory levels at the LME and SHFE. [CHART COPPER HG USD/lb, October 2016 to September 2026]

Financial media often link the rise in copper prices to the AI trade. Data center construction and AI capital spending are usually cited as the reason. The chart below suggests the picture is more complicated. Copper (COMEX HG) rose 115.2 percent between October 2016 and March 2022. This was before the AI trade took hold. From March 2022 to September this year the increase has been a more moderate 36.2 percent. When looking at copper price moves, it helps to look beyond AI headlines. Basic supply and demand balances and inventory levels matter too. A few points worth watching. Shifts in China's demand mixState Grid's spending on transmission and distribution upgrades.Domestic output and export volumes for solar, wind and EV related goods. Constraints on the supply sideTreatment and refining charges near historic lows.Declining ore grades and disruption risk at major mines in Chile and Peru, including Cobre Panama.Lead times for new mine development, typically over fifteen years. Infrastructure renewal and macro conditions in the US and EuropeGrid modernization and renewable interconnection needs.Real interest rates in dollar terms, along with visible inventory levels at the LME and SHFE. [CHART COPPER HG USD/lb, October 2016 to September 2026]

Sukegawa Electric (7711): Operating margin at 24.9 percent, five straight years of profit growth built on liquid metal technology, with fusion energy as further upside

Japan's Inward FDI. What the Rising Trend Means Why Inward FDI Matters When a foreign company builds a factory in Japan or acquires a Japanese firm, more happens than a simple inflow of money Foreign management know how, technology, and access to global supply chains tend to come with it, and these can spread to domestic firms, supporting higher productivity and new jobs Direct investment differs from short term trading in stocks or bonds. It involves a long term commitment to a factory or a business unit, so its effect on the underlying strength of an economy tends to last longer What the Ratio to GDP Shows Inward FDI stock divided by nominal GDP shows how much of an economy is under some form of foreign ownership control, relative to its size A higher ratio is often read as a sign that a country is easier for foreign firms to enter, in terms of regulation and business practice Japan's ratio has stayed unusually low for a long time by international standards According to UNCTAD data, Japan ranked 198th out of 201 countries and regions in 2020. Only Iraq, North Korea, and Zimbabwe ranked lower This is part of the reason the Japanese government has made expanding inward FDI a national policy goal How to Read the Upward Trend The ratio stood at 3.7% in 2010 and reached 8.7% in 2025, more than doubling over fifteen years The rise has continued since 2020, when the ratio was 7.2%, adding another 1.5 percentage points over the past five years The absolute level is still low, but this fifteen year rise, and especially the pace over the last five years, is something JPARCVUE views positively There is a common criticism of this trend. Profits earned by foreign affiliated firms in Japan will eventually be sent home as dividends, and this could become a source of yen selling later on JPARCVUE sees this concern as premature. Japan's inward FDI is only now starting to move, from a level that was unusually low by international standards Worrying about future profit repatriation before the investment itself has built up looks like the wrong order of priorities It makes more sense to first grow the volume of investment, and deal with repatriation issues once they actually become a problem, in JPARCVUE's view This is not a fast moving topic like currency or stock prices, and the numbers involved can seem unremarkable Even so, JPARCVUE thinks general reporting could give this more attention than it currently gets Specialist economic media and government reports do cover it regularly, but its importance does not seem to reach a wider audience This remains an important factor for Japan's long term, stable economic growth, and JPARCVUE believes it is worth continued attention Source: Ministry of Finance and Bank of Japan, International Investment Position of Japan; Cabinet Office, National Accounts of Japan. Country ranking based on UNCTAD data cited by Japan's Cabinet Office (2020).

Japan's Inbound Investment and Trade Balance Are Improving. The Work Is Not Done US Treasury US Secretary Scott Bessent has reportedly been pressing the Bank of Japan toward a rate hike and a shift in policy. On September 1 he said he had told Japan to end its reflation policy. On September 8 he said he is now the house, a comment that helped push the yen higher. These reports are a good reason to look again at a policy the Japanese government has pursued for years, the expansion of inbound direct investment. This policy has been producing real results, and part of that result now shows up in the trade balance. If the Bank of Japan sends an unexpectedly hawkish signal out of concern for the relationship with Washington, it could interrupt this gradual shift. What the Data Show Monthly figures for both inbound FDI and the trade balance move around a lot. This is largely due to the timing of large M&A deals and cash movements between parent companies and their subsidiaries. To see the underlying trend, we smooth the data using a 12 month rolling average. On this basis, inbound FDI moved into a higher range starting around the end of 2024 and the start of 2025. The trade balance followed roughly a year later, moving out of negative territory around the end of 2025 and the start of 2026. This 12 month average is our own calculation. It is not a framing used in press coverage. What was reported is that Japan's trade balance for the first half of 2026, January through June, showed a surplus of 742.1 billion yen, the first first half surplus since 2021. That is a simple calendar half year figure from Nikkei. The chart here suggests the underlying shift may have begun earlier, around the end of 2025. A Note Against Reading Too Much Into This This data should not be read as proof that inbound investment and trade balance improvement alone will fix Japan's economy. The effects of inbound investment take years to reach the real economy. This is not a policy with a quick payoff. It only works if it continues over a long period. What the data shows here is that a long running effort is starting to appear as a visible trend. It would be premature to conclude that yen weakness or Japan's trade structure problems are solved. The Risk From Political Pressure This is why the pressure from Washington, especially the comments from Bessent, deserves attention. If the Bank of Japan gives too much weight to the relationship with the United States and sends a hawkish signal beyond what markets expect, it could set back the progress made in both inbound investment and the trade balance. That said, this is a risk that officials at the Bank of Japan are almost certainly already aware of. Note. The 12 month rolling framing is the author's own calculation based on BOJ balance of payments data. Official reporting from Nikkei highlighted that Japan's trade balance for the first half of 2026 turned positive, a surplus of 742.1 billion yen. This was the first first half surplus since 2021, reported on a simple calendar half basis. This chart shows that the underlying trend had already begun shifting several months earlier.

Japan's Inward FDI. What the Rising Trend Means Why Inward FDI Matters When a foreign company builds a factory in Japan or acquires a Japanese firm, more happens than a simple inflow of money Foreign management know how, technology, and access to global supply chains tend to come with it, and these can spread to domestic firms, supporting higher productivity and new jobs Direct investment differs from short term trading in stocks or bonds. It involves a long term commitment to a factory or a business unit, so its effect on the underlying strength of an economy tends to last longer What the Ratio to GDP Shows Inward FDI stock divided by nominal GDP shows how much of an economy is under some form of foreign ownership control, relative to its size A higher ratio is often read as a sign that a country is easier for foreign firms to enter, in terms of regulation and business practice Japan's ratio has stayed unusually low for a long time by international standards According to UNCTAD data, Japan ranked 198th out of 201 countries and regions in 2020. Only Iraq, North Korea, and Zimbabwe ranked lower This is part of the reason the Japanese government has made expanding inward FDI a national policy goal How to Read the Upward Trend The ratio stood at 3.7% in 2010 and reached 8.7% in 2025, more than doubling over fifteen years The rise has continued since 2020, when the ratio was 7.2%, adding another 1.5 percentage points over the past five years The absolute level is still low, but this fifteen year rise, and especially the pace over the last five years, is something JPARCVUE views positively There is a common criticism of this trend. Profits earned by foreign affiliated firms in Japan will eventually be sent home as dividends, and this could become a source of yen selling later on JPARCVUE sees this concern as premature. Japan's inward FDI is only now starting to move, from a level that was unusually low by international standards Worrying about future profit repatriation before the investment itself has built up looks like the wrong order of priorities It makes more sense to first grow the volume of investment, and deal with repatriation issues once they actually become a problem, in JPARCVUE's view This is not a fast moving topic like currency or stock prices, and the numbers involved can seem unremarkable Even so, JPARCVUE thinks general reporting could give this more attention than it currently gets Specialist economic media and government reports do cover it regularly, but its importance does not seem to reach a wider audience This remains an important factor for Japan's long term, stable economic growth, and JPARCVUE believes it is worth continued attention Source: Ministry of Finance and Bank of Japan, International Investment Position of Japan; Cabinet Office, National Accounts of Japan. Country ranking based on UNCTAD data cited by Japan's Cabinet Office (2020).

Japan's Inbound Investment and Trade Balance Are Improving. The Work Is Not Done US Treasury US Secretary Scott Bessent has reportedly been pressing the Bank of Japan toward a rate hike and a shift in policy. On September 1 he said he had told Japan to end its reflation policy. On September 8 he said he is now the house, a comment that helped push the yen higher. These reports are a good reason to look again at a policy the Japanese government has pursued for years, the expansion of inbound direct investment. This policy has been producing real results, and part of that result now shows up in the trade balance. If the Bank of Japan sends an unexpectedly hawkish signal out of concern for the relationship with Washington, it could interrupt this gradual shift. What the Data Show Monthly figures for both inbound FDI and the trade balance move around a lot. This is largely due to the timing of large M&A deals and cash movements between parent companies and their subsidiaries. To see the underlying trend, we smooth the data using a 12 month rolling average. On this basis, inbound FDI moved into a higher range starting around the end of 2024 and the start of 2025. The trade balance followed roughly a year later, moving out of negative territory around the end of 2025 and the start of 2026. This 12 month average is our own calculation. It is not a framing used in press coverage. What was reported is that Japan's trade balance for the first half of 2026, January through June, showed a surplus of 742.1 billion yen, the first first half surplus since 2021. That is a simple calendar half year figure from Nikkei. The chart here suggests the underlying shift may have begun earlier, around the end of 2025. A Note Against Reading Too Much Into This This data should not be read as proof that inbound investment and trade balance improvement alone will fix Japan's economy. The effects of inbound investment take years to reach the real economy. This is not a policy with a quick payoff. It only works if it continues over a long period. What the data shows here is that a long running effort is starting to appear as a visible trend. It would be premature to conclude that yen weakness or Japan's trade structure problems are solved. The Risk From Political Pressure This is why the pressure from Washington, especially the comments from Bessent, deserves attention. If the Bank of Japan gives too much weight to the relationship with the United States and sends a hawkish signal beyond what markets expect, it could set back the progress made in both inbound investment and the trade balance. That said, this is a risk that officials at the Bank of Japan are almost certainly already aware of. Note. The 12 month rolling framing is the author's own calculation based on BOJ balance of payments data. Official reporting from Nikkei highlighted that Japan's trade balance for the first half of 2026 turned positive, a surplus of 742.1 billion yen. This was the first first half surplus since 2021, reported on a simple calendar half basis. This chart shows that the underlying trend had already begun shifting several months earlier.

Sukegawa Electric (7711): Operating margin at 24.9 percent, five straight years of profit growth built on liquid metal technology, with fusion energy as further upside

The AI bubble debate tends to get emotional. I think we should look at individual metrics more objectively instead. One useful example is GPU depreciation periods. A useful life assumption is not a fact. It is just management's estimate. The longer that estimate, the lower this year's depreciation expense. That makes operating profit look higher than it might otherwise. In November 2025, investor Michael Burry brought this issue into the public eye. He argued that hyperscalers depreciate their Nvidia chips over four to six years, even though the real technology cycle is closer to two or three years. He called this an artificial boost to earnings. He then took short positions against Nvidia and Palantir. My starting point is a bit different from his. I do not treat a long useful life as a problem by itself. What matters more is whether that assumption is backed by real evidence. A longer estimate can also reflect genuine operational efficiency. Burry focuses on the idea that profits are already inflated today. What I want to focus on instead is the quality of the balance sheet. If the accounting estimate turns out to be longer than the real economic life, that gap will eventually show up as an impairment. When that happens, it hits earnings and the balance sheet at the same time, and it can also drag down how the market values the company. Burry's conclusion is to act now, through a short position. My conclusion is more modest. I think this is something worth watching closely over time. I want to apply this same lens to Japanese stocks. Sakura Internet (3778) and SoftBank (9434) both run AI businesses on the latest Nvidia GPUs, including the H100, B200, and GB200. That puts them on the same technological footing as the US hyperscalers. But when I checked their securities reports, neither company discloses a GPU specific useful life on its own. Sakura Internet mostly follows the standard tax based useful life. SoftBank discloses a wide range, something like two to twenty years, without breaking out GPUs specifically. Neither shows the kind of clear, numeric changes that US companies disclose. In short, there simply is not enough information to judge this properly yet. That is exactly why I think it matters to keep watching. Not just the headline numbers in earnings reports, but the footnotes on useful life assumptions, and how they compare across companies over time.