AI spawns a new investment favorite! The rise of HALO trading, with heavy asset enterprises, Japan's powerful nation, is expected to become the ultimate winner

Gelonghui, February 28 — While global investors are rushing into light-asset tech companies amid the AI wave, a countercurrent is quietly reshaping market logic. Media reports indicate that companies with “heavy assets and low淘汰率” (HALO) characteristics are becoming new favorites for capital hedging. Japan’s stock market, with its deep industrial accumulation, is poised to be the ultimate winner in this strategic shift.

The industry disruption caused by AI is forcing investors to reassess risks. Morgan Stanley was the first to propose the HALO trading concept, advocating allocation to high-barrier physical assets like power and railways to hedge against technological iteration risks. Goldman Sachs’ latest research further confirms this trend. Under the triple pressures of rising interest rates, geopolitical fragmentation, and surging AI capital expenditure, the market is experiencing a “scarcity re-pricing,” with tangible production capacity becoming a scarce resource. Goldman analysts note that investors are no longer blindly chasing light-asset narratives; the market is beginning to reward hard-to-duplicate capacity, networks, and infrastructure. This shift is especially pronounced in Japan, where traditional manufacturers once criticized as “zombie companies” are unexpectedly gaining capital favor due to their high equipment specificity and industry barriers.

Renowned Japanese equity strategist Pelham Smithers points out that Japan retains critical global supply chain skills. As the U.S. pushes full throttle toward re-industrialization, it finds that Japan has already deeply cultivated the industries it urgently needs. A typical example is the new large-scale gas turbine project in the U.S., which relies heavily on Japan’s precision machinery technology to meet the enormous energy demands of AI computing power. Deeper competitive advantages lie upstream in the supply chain. The semiconductor boom has given specialized material manufacturers absolute bargaining power, with companies like Mitsui Mining and Nitto Boseki monopolizing key raw materials for AI chip manufacturing.

Within Morgan Stanley’s HALO index, covering seven major sectors including materials and utilities, Japanese companies’ share has significantly increased. The Tokyo Stock Exchange’s main board price-to-book ratio (P/B) has rebounded 32% from last year’s lows, reflecting a market revaluation of Japan’s industrial value. Behind this reversal is a fundamental change in industry logic. Post-bubble, the Bank of Japan continued to extend debt maturities for heavy-asset companies. This seemingly conservative strategy has preserved Japan’s precision manufacturing capabilities. Today, these companies, with their irreplaceable technological barriers, hold bargaining power in the global supply chain rebuild.

However, the HALO strategy is not a universal safe haven. Its core assumption relies on the continued deepening of AI disruption. If technological paths shift or market preferences change, Japanese stocks could face renewed pressure. Smithers warns that Japan’s HALO position is maintained amid criticism, which could resurface at any time. Currently, from gas turbine factories to semiconductor cleanrooms, Japanese manufacturing is experiencing a long-awaited value discovery. As global capital re-recognizes the defensive appeal of heavy assets, Japan—once considered a laggard—may be writing a new chapter of growth.