In this episode of Lead-Lag Live, portfolio manager Hervé Van Caloen of Mercator Investment Management joined the discussion to unpack what he sees as a powerful global rotation underway—one that stretches well beyond U.S. equities and into Japan, Europe, Latin America, and strategically critical industries like semiconductors, defense, energy infrastructure, and space.
The conversation underscored a central theme: capital is increasingly following long-duration structural shifts, not short-term narratives.
Japan’s Market Revival Is Policy-Driven—and Structural
Japan’s equity market continues to make headlines as the Nikkei pushes to record highs, but Van Caloen emphasized that this move is not sudden or speculative. Its foundation dates back to reforms initiated more than a decade ago, beginning with aggressive monetary and fiscal measures, followed by sweeping changes to corporate governance.
Those policies are now accelerating. Japan’s renewed commitment to growth, export competitiveness, and domestic investment is drawing sustained global capital—particularly into industrials, technology, and infrastructure-linked sectors.
Semiconductors: Oligopolies, Not Commodities
A major focus of the discussion was the global semiconductor ecosystem. Van Caloen highlighted why the industry remains dominated by a small group of highly specialized firms—both in chip manufacturing and in the equipment required to produce advanced semiconductors.
These companies operate in what are effectively technological oligopolies, with massive barriers to entry, long development cycles, and deeply embedded expertise. While the semiconductor cycle can be volatile, the underlying businesses remain structurally profitable.
Japan’s push to rebuild domestic semiconductor capacity is a key part of this story. Public-private partnerships and long-term capital commitments signal a strategic effort to regain relevance in an industry that is now central to national security, AI, and global supply chains.
Beyond Japan: Latin America, Space, and Defense
The conversation expanded well beyond Asia.
In Latin America, Van Caloen pointed to the combination of improving political backdrops and underpenetrated digital economies. Structural growth in e-commerce and financial technology continues to reshape the region, offering long-term opportunities independent of U.S. market cycles.
In space, commercial launch activity is no longer confined to a single dominant player. The rapid growth of satellite deployment, launch cadence, and private innovation reflects how space has shifted from exploration to infrastructure.
Defense spending also emerged as a defining theme. With geopolitical tensions rising and NATO members increasing budgets, investment is flowing toward advanced technologies—from robotics and sensors to energy systems and autonomous platforms. This is not a short-term cycle, but a multi-year reallocation of capital driven by national priorities.
AI, Energy, and Infrastructure: The Next Decade’s Build-Out
Artificial intelligence sits at the center of many of these trends, but Van Caloen stressed that AI’s impact extends far beyond software. The surge in computing power requires massive upgrades to electric grids, energy generation, and industrial infrastructure.
Companies tied to power management, grid modernization, and electrification stand to benefit for years—not quarters—as AI adoption drives sustained demand for electricity and physical assets worldwide.
A Broader Takeaway: Global Diversification Is Back
The overarching message was clear: investors may be underestimating the breadth of opportunity outside U.S. mega-caps. Japan’s resurgence, Europe’s defense awakening, and growth across emerging markets suggest that global diversification is becoming less optional—and more strategic.
As valuations diverge and capital reallocates, markets that lagged for years are beginning to assert leadership again.
🎥 Watch the full Lead-Lag Live episode to hear Hervé Van Caloen’s complete global perspective and how these structural shifts may shape the next investment cycle.
DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Mercator Investment Management and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.
