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Must Read Research: Earnings; European Energy Markets; Memory Demand; MSCI EM Reshuffle
- U.S. equity second-quarter EPS is projected to grow 30% year over year excluding Alphabet and Amazon investment gains, with AI-related growth slowing to 16% while overall EPS growth remains above 20% through the fourth quarter.
- European power demand is reaching levels not seen since the start of the Ukraine war due to a 15-year hottest summer, driving solar and wind output to record highs and increasing price volatility, with natural gas generation ramping up to compensate for renewable fluctuations.
- Europe gas or TTF forecasts are being raised on low inventory levels, with prices potentially exceeding 80 euros per megawatt hour in winter if Strait access remains unreliable, while the economics of solar and batteries are shifting below the cost of new coal and nuclear projects.
- Hyperscaler spending is projected to reach approximately $1.2 trillion in calendar year 2027, benefiting memory sectors where SK Hynix targets a 40% market share in high bandwidth memory and QLC NAND-based enterprise SSDs by 2028.
- SK Hynix is positioned to participate in high-value memory segments including high-bandwidth memory, LP-DDR5, and enterprise SSDs, with stable average selling prices expected to hold through 2027 and 2028.
- Asian semiconductor operating profit in Korea is expected to exceed 300 trillion won annually starting in the third quarter of 2026.
- Emerging market reclassification is anticipated with Greece moving to developed status in 2027, while Indonesia and Turkey face potential downgrades to frontier markets.
- Argentina's return to standalone status is considered likely but slow, and South Korea's current 18% Emerging Markets Index weight may allow for graduation to developed market status.
- A broad index reshuffle could direct $9.6 billion into Latin America, increasing its Emerging Markets weight from 7.2% to 8.9%, while excluding South Korea and Taiwan could alter regional weights significantly with China at 23% and India at 15%.
- Emerging market concentration remains low compared to developed markets, where the United States comprises over 70% of the index, followed by Japan at 6% and Britain at 3%.
- Investors may increasingly demand acceleration in earnings momentum rather than continued strength as a primary driver for equity valuations.