Japan Portfolio Strategy Halo

Goldman Sachs introduces the HALO (Heavy Assets, Low Obsolescence) thematic to Japan, highlighting a performance shift away from asset-light growth stocks toward capital-intensive companies. This trend is driven by geopolitical tensions and rising AI disruption risks in software and services.

Key Takeaways

• 1.The HALO (Heavy Assets, Low Obsolescence) framework is now being applied to the Japanese market following its success in Europe and Asia.
• 2.HALO stocks are outperforming LAHO (Light Assets, High Obsolescence) stocks due to geopolitical re-alignment and fears of AI disruption in asset-light sectors.
• 3.The valuation premium for growth-oriented, asset-light stocks in Japan peaked in early 2022 and is currently in a reversal trend.

Table of Contents

• JAPAN PORTFOLIO STRATEGY
• The relative attractiveness of LAHO vs HALO globally started to shift from early 2022
• Implementation ideas
• Appendix: Japan Capital Intensive (GSJPHALO) and Capital Light (GSJPLAHO) baskets
• Screening Filters and Definitions
• Criteria for Capital Intensive / Capital Light Baskets
• Disclosure Appendix

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