Ishiwa Shigeru's visit to the United States triggers market nerves: Defense and energy become focal points.

As Japanese Prime Minister Ishihara prepares for his first meeting with President Trump, awareness of risks and opportunities in the Japanese market has significantly increased. In this meeting, stocks related to defense, energy, and artificial intelligence are highly anticipated, with the market generally expecting stocks in these areas to see further gains. Despite the attention on the automotive industry due to tariff issues, investors believe that a reduction in discussions about tariffs during the meeting would be beneficial for these major exporters. This week, the yen exchange rate has risen, but uncertainty surrounding the impact of Trump's tariff policies on trade and inflation has increased volatility in the yen exchange rate. Currently, Japan has not become a target of Trump's broad tariff threats, giving the market some optimistic reasons. However, Japan's trade surplus with the United States remains a concern. It is worth noting that Ishihara lacks foreign policy experience compared to former Prime Minister Shinzo Abe, who has been praised for his good relationship with Trump but could not avoid the fate of steel and aluminum tariffs. Rajeev De Mello, Global Macro Portfolio Manager at Singapore's Gama Asset Management SA, is closely monitoring the automotive and pharmaceutical industries. He stated that Ishihara will explain to Trump that Japan is not expanding its trade surplus by maintaining a weak yen. Phillip Wool, Head of Portfolio Management at Rayliant Global Advisors Ltd. in Hong Kong, believes that if this meeting focuses more on communication between the two leaders, energy and defense may become the center of discussion. Here are some detailed descriptions of market sectors worth noting: Defense and Artificial Intelligence In the defense and artificial intelligence sectors, companies like Ishikawajima-Harima Heavy Industries Co., Ltd., Mitsubishi Heavy Industries, Ltd., and Kawasaki Heavy Industries, Ltd., have been outstanding performers in the Nikkei 225 index over the past year. Dilin Wu, research strategist at Pepperstone Group Ltd., pointed out that if Japan promises to increase military spending or purchase more American equipment, companies like Mitsubishi Heavy Industries may benefit. Meanwhile, Trump's focus on the field of artificial intelligence could also bring opportunities to related companies, such as Hitachi, Ltd., which may benefit from AI-related energy transmission projects. Energy and Shipping In energy and shipping, it is reported that Ishihara will ask Trump to provide stable energy supplies, which may include importing shale gas. Hiroshi Namioka, Chief Strategist and Fund Manager at T&D Asset Management Co., believes that the issue of liquefied natural gas will be one of the focal points for discussion, which could be positive for Japan. If energy negotiations progress smoothly, it is expected that the stock prices of power companies and companies engaged in liquefied natural gas transportation will rise. Automakers Automakers have been a focus of the market due to trade issues. Companies like Toyota Motor Corp. have been in the spotlight as they supply the U.S. market through factories in Japan, Canada, Mexico, and the United States. Earlier, Trump hinted at imposing a 25% tariff on Canada and Mexico, leading to a drop in the stock prices of car companies. However, after Trump changed his stance, the stock prices of these companies rebounded. Tim Waterer, Chief Market Analyst at KCM Trade, pointed out that if Trump takes a tough stance on Japanese product imports, Japanese automakers may be among the targets. Nippon Steel Furthermore, traders are watching Ishihara and Trump's conversations to understand his comments on the proposal for Nippon Steel to acquire United States Steel Corporation. The proposal was blocked by Joe Biden in January. It is reported that Trump met with the CEO of United States Steel Corporation, Dave Burritt, at the White House the day before meeting with the Japanese Prime Minister. Currency Position In terms of currency position, Trump has previously accused Japan and China of devaluing their currencies, causing anxiety in the foreign exchange market. Any statements that could affect the yen exchange rate may have an impact on the foreign exchange market. Ray Attrill, Director of Foreign Exchange Strategy at National Australia Bank, pointed out that the yen market seems to have some optimism about Japan potentially being spared from tariffs, but emotions about tariffs during the meeting may still affect the movement of the yen. Yukio Ishizuki, Senior Foreign Exchange Strategist at Daiwa Securities Co., issued a warning, noting that Ishihara's visit to the United States could "cause a stir." He emphasized, "Given that trade has become a global talking point, it is natural for President Trump to raise the issue of the trade deficit between Japan and the United States." Overall, the market is closely watching the visit of Japanese Prime Minister Ishihara to the United States. Investors are closely monitoring the discussions and outcomes between the two leaders to understand their impact on the market.