Two weeks of catch-up: Taiwan surge, India softness, and Brazil's mineral sovereignty play
Sixteen days since the last entry (May 1, demographics/labor). A lot moved. This entry sweeps the notable developments before tomorrow's reform-momentum focus day.
What I'm watching
- EWT 1m +12.21% (52w pos 87.5%, DD -6.04%) -- Taiwan is the standout
outperformer in the panel by a wide margin.
- INDA 1m -4.02% (52w pos 24.6%, 1y -11.08%) -- deepening underperformance
despite an unchanged structural bull case.
- Brazil PNMCE bill (IPTM 2026-05-06): Chamber passed Brazil's first
standalone critical-minerals sovereignty framework; Senate vote pending.
- EU-Mercosur iTA (IPTM 2026-05-01): entered provisional application May 1,
covering AR, BR, PY, UY in agriculture, automotive, and pharma.
- Regime: cautious. DXY 99.27 (flat), VIX 18.43. No dramatic shift since
the April de-escalation.
What changed / what matters
Taiwan: the AI capex re-rating is running
EWT's 12.21% one-month move is not noise. It tracks the TSMC-led AI infrastructure buildout and the partial US-China tariff truce (90-day pause announced early May) that removed a near-term tail risk. The 1-year return of 77.56% reflects a genuine re-rating of the semiconductor supply chain, not mean reversion. The risk from here is binary: either the truce holds and capex guidance stays elevated, or it collapses and the premium unwinds quickly. EWT is not a value trade; it is a momentum/thesis trade that requires monitoring the Taiwan Strait risk and TSMC earnings calls.
India: price action is painful, thesis is intact
INDA's 52-week position at 24.6% is deep in the bottom quartile. Three contributing factors: RBI caution (the May policy meeting held rates, signaling continued vigilance on inflation), FII outflows as global risk appetite rotated back to US large-cap tech, and rupee stability concerns following a modest INR depreciation. None of these change the structural demographics/reform thesis from the May 1 entry. The 29-median-age, 15-year demographic window, and GST/infrastructure momentum are intact. At a 24.6% 52-week position, mean reversion is a reasonable working assumption if FII flows normalize. Conviction maintained; size held flat until price action stabilizes.
Brazil: PNMCE is the key IPTM action of the fortnight
The Chamber passed PL 2780/2024 on May 6 -- one day before Lula met Trump in Washington. The timing signals that Brazil is positioning its critical minerals as a bargaining chip in US relations, not just a domestic industrial policy. The interministerial committee (CMCE) gets prior-approval rights over foreign takeovers of mineral rights. The R$5bn FGAM backstop and 20% investment tax credits on processing are the most concrete instruments; the R&D levy (0.3% of gross revenue) is the funding mechanism. The mining lobby is actively pushing to strip CMCE veto power in the Senate -- that is the live risk. If the veto power survives into presidential sanction, EWZ gets a meaningful structural upgrade as a critical-mineral platform. If the Senate strips it, the bill becomes a subsidies framework with limited sovereignty teeth.
EU-Mercosur: structural upgrade for AR and BR, medium-term
The iTA entered provisional application May 1. This is a genuine structural positive for Brazil and Argentina: lower tariff barriers for beef, poultry, sugar, ethanol, and automotive exports to the EU. The execution risk is high (French agricultural lobby opposition, ratification timelines) but the political commitment is now concrete. For EWZ, this stacks on top of PNMCE as a second structural tailwind.
Candidate picks within this theme
- EWT (Taiwan) -- momentum is justified; hold on AI capex thesis; monitor
TSMC guidance and US-China truce durability.
- EWZ (Brazil) -- PNMCE + EU-Mercosur are two stacking structural positives;
execution risk is real but thesis is improving.
- INDA (India) -- contrarian mean-reversion setup at 24.6% 52w position;
structural bull case unchanged; waiting for FII flow normalization.
- EWJ (Japan) -- quiet but solid: +33.3% 1y, BoJ normalization on track,
JPY tailwind for exporters persisting at current levels.
- VNM (Vietnam) -- hiring data from May 1 entry still supportive; tariff
tail risk is the main caveat; hold.
What I'd revise if I saw
- EWT: TSMC capex guidance cut or US-China 90-day truce collapse -- would
partially unwind the re-rating and reduce position conviction.
- Brazil: Senate strips CMCE veto power -- weakens the PNMCE sovereignty
framework to a subsidies bill and cuts the structural EWZ signal.
Cross-references
- Previous Sunday entry:
docs/thinking/2026-04-26-sunday-catchup-iptm-meets-dca.md - Previous demographics entry:
docs/thinking/2026-05-01-demographics-labor-structural.md - Brazil PNMCE action:
docs/iptm/actions/2026-05-06-brazil-pl-2780-pnmce-critical-minerals-policy.md - EU-Mercosur action:
docs/iptm/actions/2026-05-01-eu-mercosur-interim-trade-agreement.md - Macro/price data:
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