Japanese Prime Minister Sanae Takaichi's hardline Taiwan remarks triggered a sharp deterioration in Japan-China relations. China issued a travel warning to Japan, projecting a ¥2.2 trillion tourism revenue loss and a 0.36% drag on Q4 2025 GDP. The yen fell to the 157 zone amid heightened equity volatility, threatening global semiconductor and rare-earth supply chains.

Huangshi Capital's Professional Perspective：

Asian Assets Amid Geopolitical Friction: Risk Budgeting First

Against escalating Japan-China tensions, Yellowstone Capital recommends immediate review of Asian exposure, particularly Japan's China-reliant export sectors. Our risk-budget framework caps such exposure at 10% of total portfolio, buffered by USD-denominated cross-market hedges. Historical data show similar events raise regional equity volatility by ~25%; pre-set maximum acceptable loss thresholds keep drawdowns within -5%. Preference is given to highly liquid global ETFs over single-country equities to preserve cross-cycle stability.

We insist family offices integrate geopolitical stress tests into quarterly balance-sheet reviews, simulating cascading effects from tourism collapse. Yellowstone's bespoke strategies help construct "dynamic buffers" by allocating 20% to gold and U.S. Treasuries as anchors. Absent meaningful APEC de-escalation, gradual rotation into Southeast Asian diversified supply-chain investments is advised. Our conviction remains: stable returns stem from profound respect for uncontrollable factors, not short-term speculation.