Deputy Chief Economist

Sharmila Whelan

Independent and original Asian investment research

Aletheia Capital

Aletheia Capital (HK) Ltd. (previously known as Asianomics) combines the extensive knowledge of its experienced team with technology and regulatory changes to disrupt Global Markets business in Asia. The firm is completely independent with no conflicts of interest either on Investment Banking advisory or Capital Markets execution.

Thematic (Sector/Industry)

The US-China trade tensions have eased for the moment. But China’s leaders realise that the real war between a rising and an existing economic superpower will be a protracted one.  Recognising this, China is accelerating regional integration while exploiting comparative advantages to encourage the growth of new technology and specialisation hubs at home. China’s Belt and Road Initiative, which will open up new markets by connecting the Eurasia landmass is one hedge against rising US protectionism. Of equal importance is the development of the Greater Bay Area (GBA). It is integral to the success of the BRI and President’s Xi Jinping’s Made in China 2025 plan.  We explain why over the course of two notes. This is the first.

The US-China trade tensions have eased for the moment. But China’s leaders realise that the real war between a rising and an existing economic superpower will be a protracted one.  Recognising this, China is accelerating regional integration while exploiting comparative advantages to encourage the growth of new technology and specialisation hubs at home. China’s Belt and Road Initiative, which will open up new markets by connecting the Eurasia landmass is one hedge against rising US protectionism. Of equal importance is the development of the Greater Bay Area (GBA). It is integral to the success of the BRI and President’s Xi Jinping’s Made in China 2025 plan.  We explain why over the course of two notes. This is the first.

Greater Bay Initiative - Upping Integration, Part 1

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/132/original/2019-03-25_18-58-11.png?1553507902" class="editor-image img-responsive" data-smartkarma-image-id="83132"></figure>Source: Japan Analytics
</div>There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">S</a><a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">oftbank Group (9984 JP)</a>) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/206/original/2019-03-25_17-46-58.png?1553565764" class="editor-image img-responsive" data-smartkarma-image-id="83206"></figure><div class="content-caption">Source: Japan Analytics</div>OVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'.


Source: Japan Analytics
There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including Softbank Group (9984 JP)) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •Source: Japan AnalyticsOVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - Softbank Group (9984 JP)'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'. 

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

During a blockchain conference in Singapore, the MAS director of Fintech Infrastructure Office shared about how they will regulate tokens targeting Singapore-based residents based on the characteristics of the tokens, rather than what they define themselves to be. This article has three sections:
<ol>
<li>How MAS categorises tokens</li>
<li>Key activities being regulated under an upcoming Payment Services Bill</li>
<li>Three important questions raised regarding definitions and overlapping activities</li>
</ol>
In a follow-up article, I will discuss the implications on e-wallet operators such as <a href="https://www.smartkarma.com/entities/24380" target="_blank" data-smartkarma-citation="entities:24380:1">Razer Inc (1337 HK)</a> and <a href="https://www.smartkarma.com/entities/26950" target="_blank" data-smartkarma-citation="entities:26950:1">Grabtaxi Holdings Pte (0967655D SP)</a>, as well as token issuer <a href="https://www.smartkarma.com/entities/27393" target="_blank" data-smartkarma-citation="entities:27393:1">Y Ventures Group Ltd (YVEN SP)</a>.

During a blockchain conference in Singapore, the MAS director of Fintech Infrastructure Office shared about how they will regulate tokens targeting Singapore-based residents based on the characteristics of the tokens, rather than what they define themselves to be.    This article has three sections:

How MAS categorises tokens
Key activities being regulated under an upcoming Payment Services Bill
Three important questions raised regarding definitions and overlapping activities

In a follow-up article, I will discuss the implications on e-wallet operators such as Razer Inc (1337 HK) and Grabtaxi Holdings Pte (0967655D SP), as well as token issuer Y Ventures Group Ltd (YVEN SP).

How the Payments Bill Will Affect E-Wallet Operators and Token Issuers in SG - Part 1

Asia Long-Short PM/Analyst

Curtis Lehnert

Equity Bottom-Up

Do the letters PUBG mean anything to you? Have mini-programs changed the way you use WeChat? Do you like Mao Buyi's song 'Xiao Chou' or did you not think he deserved to be picked in The Coming One? Did you answer 'no' to any of these questions?  Are you wondering what any of this has to do with Tencent?  If so, you have come to the right place.  
This insight is for those who do not cover Tencent, or perhaps have not taken a close look at Tencent in a while.  This insight is for those who want to understand:
<ul>
<li>the structure of Tencent's business units</li>
<li>what are the various platforms and services under the massive Tencent umbrella</li>
<li>financial performance over the past five years, in a snapshot</li>
<li>three fun facts about the company </li>
</ul>
If you need a one-stop read to understand the business of Asia's largest listed company, this is the insight for you.  All of the facts, none of the fluff.

Do the letters PUBG mean anything to you? Have mini-programs changed the way you use WeChat? Do you like Mao Buyi's song 'Xiao Chou' or did you not think he deserved to be picked in The Coming One? Did you answer 'no' to any of these questions?  Are you wondering what any of this has to do with Tencent?  If so, you have come to the right place.  
This insight is for those who do not cover Tencent, or perhaps have not taken a close look at Tencent in a while.  This insight is for those who want to understand:

the structure of Tencent's business units
what are the various platforms and services under the massive Tencent umbrella
financial performance over the past five years, in a snapshot
three fun facts about the company 

If you need a one-stop read to understand the business of Asia's largest listed company, this is the insight for you.  All of the facts, none of the fluff.

The news<ul>
<li>Three government agencies-  National Environment Agency (NEA), Housing &amp; Development Board (HDB), and Jurong Town Council (JTC) - said they will appoint one or two «master acquirers» for e-payment solutions in the next few months, according to local media reports.</li>
<li>Under a call-for-collaboration (CFC), the three agencies have asked e-payment providers to submit proposals to become a master acquirer, which will unify payment solutions for hawker stalls, food centres and industrial…</li>
</ul>

The news
Three government agencies-  National Environment Agency (NEA), Housing &amp; Development Board (HDB), and Jurong Town Council (JTC) - said they will appoint one or two «master acquirers» for e-payment solutions in the next few months, according to local media reports.
Under a call-for-collaboration (CFC), the three agencies have asked e-payment providers to submit proposals to become a master acquirer, which will unify payment solutions for hawker stalls, food centres and industrial…


Singapore Does U-Turn for E-Payment Landscape - Consolidation Soon?

China

Ant Group Co., Ltd. develops online payment platforms. The Company produces credit system and financial services platforms which provide consumers and small businesses with safe and convenient inclusive financial services globally. Ant Group provides its services worldwide.

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Ant Group (6688 HK)

Greater Bay Initiative - Upping Integration, Part 1

The US-China trade tensions have eased for the moment. But China’s leaders realise that the real war between a rising and an existing economic...

Sharmila Whelan

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33...

Campbell Gunn

How the Payments Bill Will Affect E-Wallet Operators and Token Issuers in SG - Part 1

During a blockchain conference in Singapore, the MAS director of Fintech Infrastructure Office shared about how they will regulate tokens targeting...

Valerie Law, CFA

Tencent (700 HK): A Generalist's Guide

Do the letters PUBG mean anything to you? Have mini-programs changed the way you use WeChat? Do you like Mao Buyi's song 'Xiao Chou' or did you not...

Curtis Lehnert

Singapore Does U-Turn for E-Payment Landscape - Consolidation Soon?

The news Three government agencies- National Environment Agency (NEA), Housing & Development Board (HDB), and Jurong Town Council (JTC) - said...

Valerie Law, CFA

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