🟢 [E4279] China's dominance in legacy semiconductor nodes (80% market share) and strategic metals represents 'choke points' that constrain America's ability to pursue sustained military conflict. China's semiconductor exports soared 73% YoY to $43.3bn in Jan-Feb 2026, now exceeding auto exports ($27bn, +67% YoY). Wood references earlier analysis of rare earth leverage inhibiting US military operations.

🟢 [E4316] Wood frames Trump's Iran attack as 'extremely risky politically' and a potential 'Suez moment' — a reference to the 1956 crisis that marked British imperial decline. America's ability to pursue sustained military conflict is constrained by Chinese leverage in strategic metals and legacy semiconductors.

🟢 [E4290] Wood maintains medium-term target of Rmb5 against the US dollar (significant appreciation from current levels). He keeps China sovereign debt in the global portfolio primarily for currency appreciation potential, while switching from 10-year to 5-year duration given likelihood long-term yields have bottomed.

🟢 [E4289] Wood is adding Kawasaki Heavy Industries (defense equipment maker) to the Japan long-only portfolio, replacing semiconductor equipment maker Advantest. This reflects positioning for elevated geopolitical conflict and defense sector tailwinds from the Iran situation.

💬 [E4287] Fed easing expectations for 2026 have collapsed from 60bp to only 6bp following the March FOMC meeting. Wood frames this as a risk to Hong Kong property via Fed Funds transmission but recommends buying the dip. In a Trump TACO scenario, rate hike concerns would vanish overnight.

🔴 [E4285] Philippines is traditionally vulnerable to higher energy prices given dependence on imported oil and almost complete lack of fuel/electricity subsidies. Inflation could exceed 6% in coming months, implying renewed monetary tightening with policy rate at only 4.25%. Real public construction collapsed 42% YoY in 4Q25 due to corruption scandal, while real gross capital formation declined 10.9% YoY. A hit to household spending would dash all hopes of 2H26 rebound.

🔴 [E4286] Indonesia faces growing fiscal risks from Prabowo's populist agenda. Finance Minister admitted possibility of breaching self-imposed 3% fiscal deficit limit in place since 2003. Bank Indonesia kept policy rate at 4.75% and dropped guidance on rate cuts — policy now hinges on war duration and spillovers to USD and Treasury yields. Mandiri now forecasts only one 25bp cut to 4.5% this year, down from two cuts at start of year.

🟢 [E4282] Hong Kong residential property bottomed in March 2025 — Centa-City Leading Index up 11.4% since then. Sun Hung Kai Properties rallied 128% from April 2025 low to March 2026 high of HK$148.8. Wood advises using any pullback caused by Iran-triggered Fed rate hike fears to add to Hong Kong property positions. Mainlanders comprise up to 50% of primary market buyers and 20% of secondary market.

🟢 [E4281] Wood is adding Hong Kong Exchanges & Clearing (388 HK) across all long-only portfolios (China, Asia ex-Japan, Global, International) at 4% weight. Hong Kong IPO fundraising could reach HK$700-800bn in 2026 (up from HK$287bn in 2025, highest globally). The talent inflow of 180,000/year with Beijing targeting 10m population from current 7.5m is structurally bullish for HK property and exchanges.

🟢 [E4296] Wood notes HK$700-800bn in IPOs expected in Hong Kong this year, up from HK$287bn in 2025 which was highest globally. This contrasts with A-share supply containment on 'slow bull market' theme. Hong Kong's predicted demise by Western chattering classes could not have been more wrong.

🟢 [E4294] If the US is drawn further into the Iran conflict with 'boots on the ground,' this is perversely positive for China as it increases odds of China exiting deflation by year-end. China CPI and PPI are already in rising trends. Wood expects consumption recovery evidence by year-end given household savings buildup and property market bottoming, with consumer confidence rising from 85.7 (Sep 2024) to 90.6 (Jan 2026).

🟡 [E4283] Fund managers at Jefferies Asia Forum expressed surprise that markets have not corrected more given 'historic newsflow' in the Middle East. Explanations include expectations of Trump pivot (TACO), markets conditioned to treat geopolitical events as buying opportunities, and Iran's selective Strait passage reducing immediate supply pressure.

🟢 [E4295] Wood maintains CNOOC (5% weight) and PetroChina (4% weight) in China portfolios, and increases Petrobras by 1 percentage point in global/international portfolios. Oil/gas positioning reflects both Iran conflict upside and China's relative energy resilience thesis.

🟢 [E4317] Wood maintains gold mining exposure across portfolios — Capricorn Metals (Australia) at 5-6% weight, Gold Fields (South Africa) at 5%, and Sumitomo Metal Mining (Japan) at 6%. The global sovereign bond portfolio also reflects currency debasement positioning with high-yielding EM bonds.

🟢 [E4272] Iran is allowing selective passage through the Strait of Hormuz — closing it to G7 container and tanker traffic while permitting Asian vessels (85% of energy traffic is for Asia, with China/India/South Asia accounting for ~60%). This reduces immediate supply pressure but prolongs uncertainty. Wood warns that any US attempt to attack Kharg Island via ground troops would trigger major retaliation including pre-laid mines in the Strait.

🟢 [E4273] Wood frames the conflict as a potential 'Suez moment' for America — a watershed loss of geopolitical credibility. The longer the Strait remains closed, the more severe the economic damage since 'economic growth is energy consumed.' Markets have been surprisingly calm due to expectations of a Trump pivot (TACO) and the selective passage policy.

🟢 [E4310] ASEAN countries like the Philippines are highly vulnerable to the Iran conflict due to oil import dependency and lack of fuel/electricity subsidies. Philippines inflation could exceed 6% in coming months, triggering monetary tightening (policy rate only 4.25%). Indonesia faces fiscal risks with Rp210tn energy subsidies and potential breach of the 3% deficit-to-GDP limit in place since 2003.

🟢 [E4291] China's token exports yield a 22-fold value increase versus raw electricity exports. Raw power sells for ~Rmb0.5/kWh, but converting it to AI computing power and selling as tokens dramatically multiplies value. This is becoming China's 'most efficient value-added energy trade' — leveraging cheap electricity infrastructure to build a digital economy moat.

💬 [E4292] Wood adds Zhejiang Sanhua Intelligent Controls (H share) to the China portfolio at 4% weight — an auto and robotic component supplier. This reflects positioning for China's robotics advantage thesis alongside EV plays like BYD (4%) and CATL (6%).

🟢 [E4288] Wood shifts China sovereign debt holding from 10-year to 5-year bond given 'growing likelihood that long-term bond yields in China have bottomed for now.' The rationale for maintaining China sovereign debt is currency appreciation — Wood maintains medium-term target of Rmb5 against USD. Global sovereign bond portfolio yields 6.84% average across China 5Y (1.56%), India 15Y (7.13%), Singapore 10Y (2.13%), and Brazil 10Y (14.05%).

🟢 [E4293] Wood notes confidence of Chinese enterprises in tech space has been improving since the DeepSeek moment more than one year ago, driven by growing evidence of government support and China's cost advantage in AI applications and robotics. He expects this will translate into a general recovery in consumption by year end given ongoing buildup in household savings and residential property market bottoming.

🟢 [E4274] China is winning the AI arms race through open-source LLMs and cheap electricity. Chinese AI models processed 4.12 trillion tokens on OpenRouter in the week ended Feb 15, surpassing US models' 2.94 trillion for the first time — despite US users comprising nearly half the platform's base. Beijing has designated 'computing-electricity synergy' (算电协同) as a national priority in its 2026 Government Work Report.

🟢 [E4284] China is the equity market globally least impacted by Iran war newsflow, which is why it has outperformed since the US-Israel attack. MSCI China down only 1.2% in USD terms since late February attack versus 5.1% decline in MSCI AC Asia Pacific ex-Japan and 4.9% fall in MSCI AC World. CSI 300 down 2.2% in March. Wood expects China to move out of deflation by year end — CPI inflation improved from 85.7 consumer confidence low in Sep 2024 to 90.6 in Jan 2026.

🟢 [E4278] China has the world's lowest oil/gas dependency — only 27.2% of primary energy consumption in 2024 versus 54.6% global average. This is why Wood states China has 'secured energy dominance in a global context' and is the equity market globally least impacted by the Iran war. MSCI China declined only 1.2% USD since the attack began versus -5.1% for MSCI AC Asia Pacific ex-Japan and -4.9% for MSCI AC World.

🔴 [E4275] Wood argues there is growing risk that 2026 marks peak US AI capex this cycle — a view not discounted in semiconductor stocks. US hyperscaler capex is projected to grow 65% to $620bn in 2026, but supply constraints (energy) and demand risks (questioning ROI, Meta's Avocado model delay, OpenAI losing market share to Gemini) create downside catalysts. AI capex is increasingly debt-funded with IIF estimating $450bn annualized bond issuance.

🟢 [E4276] China has massively outpaced US power generation capacity additions. China's annual net additions reached ~550GW in 2024-2025 versus minimal US growth. Total Chinese electricity generation capacity stock now exceeds 3,500GW versus ~1,250GW for US utility-scale. Wood heard estimates in Beijing that electricity costs will fall to one-third of current levels in ten years as solar scales further.

🟢 [E4277] Jefferies China tech team projects China AI capex rising from Rmb519bn ($72bn) in 2025 to Rmb1.67tn ($242bn at current FX) by 2030. Wood has 'much greater confidence' that China AI capex will continue to increase versus US, where 2026 may mark cycle peak. Chinese enterprise tech confidence has improved since DeepSeek moment over one year ago.

🔴 [E4280] Wood questions the sustainability of US AI capex at current levels. The Financial Times highlighted the energy bottleneck as one reason supply constraints may cause AI capex not to grow as fast as anticipated. Meanwhile, Gillian Tett's article warns 'Power failure could undermine America's AI ambitions.' Wood has much greater confidence that China AI capex will continue increasing versus US potentially peaking.