[NAV Forecast] WCM Next Generation & World's Best: US and European stocks rebound sharply as inflation concerns recede following a plunge in crude oil prices; both funds …

Good morning, this is TOMMY_JUNE.

In today’s US market, crude oil futures plunged (-4.12%) after US President Trump indicated that the possibility of resuming attacks on Iran is low. This led to a sharp rebound across the three major indices as inflation concerns receded (S&P 500 +2.37%, Nasdaq +2.74%, Dow +2.15%). While Nvidia fell due to an internal investigation involving CEO Jensen Huang, the excessive caution regarding AI and data center regulations following last week’s US midterm election results eased, leading to broad-based buying in industrial, consumer discretionary, and tech stocks. With European markets (DAX +1.73%, FTSE 100 +1.02%) and the Japanese market (Nikkei 225 +2.33%) also seeing a risk-on environment with gains across the board, both funds are expected to see significant increases in their net asset values.

1. Summary of NAV Forecast (Announced 11/10)

These are estimated values based on confirmed closing prices in overseas markets. While the impact of exchange rates is only a minor positive, the sharp rise in stock prices of constituent holdings, driven by the strong rebound in US and European markets, has contributed significantly.

2. Stock Contribution Analysis (Price Factors)

On a local stock price basis, both funds are showing strong performance with top holdings rising across the board.

■ WCM Next Generation

It was a broad-based rally with all top 10 holdings closing in positive territory. Top holdings such as Rolls-Royce (+4.71%), Siemens Energy (+5.08%), TSMC (+4.68%), and Meta Platforms (+5.12%) all saw significant gains, with the subtotal contribution of the top 10 holdings at +1.42%, driving the entire portfolio significantly.

■ World’s Best

Although Visa A (-0.12%) was slightly soft, the other nine top holdings all rose. In particular, Texas Instruments surged +6.62%, pushing the market up along with Rolls-Royce (+4.71%) and Microsoft (+2.75%), recording a positive contribution of +0.87% for the top 10 combined.

3. Deep Dive: Factors Behind Notable Stock Movements

Here is an explanation of the recent background for stocks that showed significant movement in the market last night.

• Texas Instruments (TXN) Change: +6.62%

  • [Buying back into the semiconductor and industrial sectors and valuation of AI and manufacturing investment] In the US market on November 9, while Nvidia fell due to company-specific factors, broad capital flowed into semiconductor and industrial stocks, supported by the views of major securities firms (Morgan Stanley and UBS) that the concerns over data center regulations that spread after the US midterm elections last week were an “overreaction.” The company’s continued investment in 300mm wafer manufacturing equipment and expectations for improved operating leverage and profit margins driven by AI-related demand were re-evaluated, making it the largest positive contributor (+0.22%) within the World’s Best fund.

• Meta Platforms (META) Change: +5.12%

  • [Revenue contribution from AI advertising tools and expectations for the holiday shopping season] As tech stocks rebounded sharply in trading on November 9, the automated AI advertising tool “Advantage+”, the efficiency of digital advertising through AI infrastructure, and expectations for increased advertiser spending ahead of the year-end holiday season acted as tailwinds. A rotation of funds from Nvidia to other large-cap tech stocks also contributed to the significant +5.12% gain.

• Siemens Energy (ENR) Change: +5.08%

  • [Steady progress in share buybacks and bullish analyst ratings] On November 9, in addition to Bernstein Research maintaining its “Outperform” rating, the announcement of progress in the share buyback program, which acquired approximately 1.54 million shares between November 2 and November 8, was well received. With the favorable environment in the European market (DAX +1.73%) and persistent expectations for power infrastructure demand for data centers, buying remained dominant throughout the day, significantly boosting the NAV of WCM Next Generation (contribution rate +0.26%).

• Rolls-Royce (RR) Price Change: +4.71%

  • [Crude oil plunge and buying back ahead of the November 12 trading update] The sharp drop in crude oil prices (-4.12%) following Mr. Trump’s remarks provided a tailwind for the aviation, defense, and industrial sectors as a whole. Furthermore, ahead of the company’s trading update (earnings report) scheduled for November 12, there was active buying back to re-evaluate the stock price, which had been adjusting over the past few weeks. As a common core holding for both funds, it contributed strongly to the positive performance, with +0.28% for WCM Next and +0.16% for World’s Best.

4. Summary of the day: Investment perspective

Today was a day of strong rebound for both US and European markets, recovering all of last week’s losses, as the sharp drop in crude oil prices due to easing tensions in the Middle East combined with a retreat in excessive pessimism regarding the results of the US midterm elections from the previous week.

WCM Next rose across the board, from European industrial and power infrastructure stocks like Rolls-Royce and Siemens Energy to high-tech and semiconductor stocks like TSMC and Meta, resulting in a significant increase in the stock price factor of +3.12% (+329 yen). World’s Best also saw a solid result with a stock price factor of +2.00% (+176 yen), as the negative impact of the decline in constituent stock Nvidia was completely covered by gains in Texas Instruments, Rolls-Royce, and Microsoft (notably, the forecast variance for World’s Best the previous day was 0 yen, a perfect match).

However, the market’s focus has already shifted to the US inflation indicators to be announced this week. The October US Consumer Price Index (CPI) is scheduled for release today, the 10th, and the Producer Price Index (PPI) on the 13th. Since the October employment report was solid, the market has already priced in a high probability of over 80% for a rate hike at the December FOMC, and depending on the results of the price indicators, the market could swing significantly again through interest rate outlooks. While enjoying the current strong rebound, it is necessary to calmly assess the market’s reaction to the inflation indicators.

TOMMY_JUNE

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