Thematic (Sector/Industry)

• US stocks plummeted on Friday, with the S&P 500 dropping 1.3% and the Nasdaq Composite falling 2.2%.
• Investors face a sparse economic calendar next week, with Nvidia’s quarterly earnings taking center stage
• Sony Honda Mobility will showcase its luxury electric vehicle, AFEELA, at CES 2025 in Las Vegas.

• Our list of HK-listed industrial companies indicated that the US generated an average of 22.9% of sales. With diversified production bases, higher tariffs may only affect ~10% of revenue.
• Vesync (2148 HK), Chervon Holdings (2285 HK), and AAC Technologies Holdings (2018 HK) are more exposed given their significant US sales yet most production is still in China. 
• While the US generated over 50% of the revenue of Techtronic Industries (669 HK) and Nexteer Automotive (1316 HK), they are less exposed given their worldwide manufacturing presence. 

• AMAT numbers sends US SPE lower on Friday which should spill over into Japan.
• Trump’s Energy Secretary nomination may be a short term positive for oil and gas related, longer-term questionable.
• Both Ibiden and Renesas have potential to be rerated on their NVDA exposure, but market indifferent so far.

• Silicon wafer area shipments in Q324 amounted to 3,214 million square inches (MSI), up 5.9% QoQ and up 6.8% YoY,
• Q324 saw the combined revenues from the top four players in the segment reaching $2.5 billion, up 0.5% QoQ and up 6.5% YoY
• Top 4 EBIT amounted to just $337 million, up 1.5% QoQ but down 38.9% YoY.

• In this report we analyzed data from technical publications to review leadership in RNA related therapeutics. We have listed the top thirty.
• In terms of quantity and quality of innovations Alnylam Pharmaceuticals (ALNY US)  and Moderna (MRNA US)  are best positioned. Among private companies Senda Biosciences screened well. 
• Partnerships and acquisitions  between RNA startups and big pharma as well as between big pharma and big pharma highlight RNA’s potential versatility, risks and the necessity for RNA related exposure.

• GenScript Biotech established operations site and logistics center in Australia. Eisai has received positive opinion from CHMP recommending approval of lecanemab. Otsuka forms JV to boost IV supply in US.
• Lunit formed strategic alliance in France to expand AI solution deployment. Daiichi Sankyo and AstraZeneca submitted a new BLA for accelerated approval in the U.S. for datopotamab deruxtecan for NSCLC.
• Cellid has completed recruiting and dosing all participants in its Phase 3 clinical trial of COVID-19 vaccine targeting Omicron variant. Alembic Pharmaceutical received FDA approval for hypertension drug.

• The rural economy plays a crucial role in driving India’s growth, contributing just under half of the total GDP and providing livelihoods for about two-thirds of the population. 
• The trend which is emerging is rural economy growing faster than urban, hence we deep dive into the what and why of this trend
• The urban slowdown has caused concern for India Inc’s earning growth.

• The Japanese market ended the week on a mixed note, with the Nikkei 225 Index down 2.2%
• Stocks moves were largely dictated by earnings. Furukawa’s full year upward revision was a standout, while THK surprised the market with a punchy buyback
• Watchlist: ASICS continues to perform well and will upgrade its mid-term outlook this week. Nexon and Appier could be worth a look after recent stock price declines

• China’s over-65 demographic is projected to grow by 50% in the next decade, driving increased demand for healthcare services, eldercare, and technology.
• The healthcare sector in China presents a significant investment opportunity as the country addresses the needs of its ageing population.
• Insights from the US, where healthcare spending is closely tied to an ageing population, can inform strategies for growth in China’s healthcare market, offering potential for long-term returns.

• For psychedelics, 2024 could be defined by the disappointing outcome of the FDA’s August review decision on Lykos Therapeutics’ (formerly MAPS) NDA for its MDMA-AT candidate for PTSD.
• The FDA’s decision flew in the face of the anticipatory excitement following the NDA submission and award of breakthrough therapy designation earlier in the year following impressive results from Lykos’ two- part Phase 3 trial.
• However, as disappointing as it is, particularly for the many millions of PTSD sufferers and Lykos, which subsequently reduced its workforce by 75%, in the grand scheme of things, this is only a temporary setback.

• While our potential universe includes a broad range of branded consumer companies across the market capitalization, one corner of that universe that we have done a lot of work on over the years involves those companies utilizing a direct selling business model, which deploys a sales force of independent contractors to get their products in the hands of consumers.
• The top trend we are monitoring for 2025 is the impact that the burgeoning market for GLP-1 drugs has on the weight loss stocks.
• Two pure-play weight- loss names we monitor, MED and WW, have already been severely affected by the disruption caused by the GLP-1 drugs and have been on the defensive in recent years.

• Elections have consequences. The November 2024 elections in the US have ushered in not just a change in political landscape for the country and the makeup of the federal government but are likely to result in material changes to government policies and priorities for 2025 and beyond.
• These include international trade, the federal regulatory environment, and tax policies that can affect consumer sentiment, company strategies when it comes to capital deployment, and end market dynamics.
• While specifics could emerge in the coming months, we expect modest inflationary pressures from expected tariffs on imported goods to be largely offset by more constructive energy policies, tax incentives, and a reduced federal regulatory burden, along with a reduced federal government role in economic decision-making to lead to an improvement in economic growth in 2025.

• Arrow Exploration (AXL LN/CN)C; Target price of £0.70 per share: 1.9 mbbl/d at latest CN well.
• Water disposal infrastructure operational.
• High net cash – The fifth horizontal well at Carrizales Norte (CNB HZ-6) is producing 1.9 mbbl/d of oil (0.95 mbbl/d net to Arrow) with a water cut of 31%.

• Biopharma will navigate the uncertainty that comes with the Trump presidency and his alliance with a populist healthcare agenda, but the less regulation-minded Republicans should be good for the group, reducing scrutiny on M&A and drug prices.
• We highlight five biopharma themes and trends heading into 2025.
• Less FTC scrutiny should drive biopharma M&A. Biopharma M&A has meaningfully slowed since mid-year, adding eight deals at >$50MM after the LLY-MORF acquisition in early July, which brings the YTD total to 34 and no longer on pace to exceed 2022 (43 deals) or 2023 (38 deals).

• U.S. stocks slid on Thursday as Federal Reserve Chair Jerome Powell indicated patience on future rate cuts amid a resilient economy.
• Tesla shares tumbled 5.8% following reports that President-elect Trump’s team may eliminate EV tax credits
• SMC slashed its full-year net profit forecast to ¥167bn, down 6% year-on-year, citing sluggish recovery in semiconductor-related capital investment

• Mixed signals for JP semi’s with the positive read from ASML set to be tempered by the AMAT numbers.
• Trump cutting the $7.5k EV tax credit hitting Tesla, Rivian and power semi’s.
• Govt. names down on concerns over what Musk’s DOGE means for Govt spending.

• 3690 HK/ JD US: Yonghui Superstores and Meituan Begin Cooperation.（+/-）
• 700 HK: Tencent Announces New Mobile Game <Monster Hunter: Traveler> in Collaboration with CAPCOM (+)
• 700 HK: Ex-CAPCOM Renowned Game Producer Joins Tencent’s Lightspeed Japan Studio (+)

• This note is a weekly (select weeks on SK) curated selection of Chinese news articles and company announcements focused on developers in distress
• We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
• We do not verify the underlying data or provide any opinion, we only select and summarize the information; See direct links to the sources

• BEKE US: Government cut property transaction related taxes, saving 2.5%-4.5% of transaction costs per unit(+)
• 1211 HK/TSLA US/1810 HK/XPEV US/NIO US/LI US: EV deliveries in the 45th week of 2024, Xiaomi rebounds, Tesla is strong, NIO and Xpeng are weak （///////////）
• ATAT US: Atour Pillow’s Double 11 Sales Exceed Expectations, Reaching RMB520mn（+）

• Tata Communications Divests INR 330 Crores ATM Business to TSI
• Tata Motors to Separate Passenger and Commercial Vehicles Business Segments
• LTIMindtree Opens 6,500 Sq. ft. Innovation Hub in Houston, Texas

• Further tech weakness in the US as markets brace for a more inflationary outlook.
• Isetan Mitsukoshi numbers and new MTP should end recent underperformance.
• Excessive Nintendo weakness on PIF cutting holdings a chance to buy ahead of new NSW announcement.

• The S&P 500 closed nearly unchanged on Wednesday, as traders digested the in-line October consumer price index report (+2.6%)
• SoftBank has unveiled plans for an ambitious AI grid in Japan, aiming to deploy 200,000 mini data centers across the country.
• Seven & i Holdings, owner of Japan’s 7-Eleven convenience stores, is exploring a potential management buyout valued at over ¥6 trillion

• L&T Secures ‘Ultra Mega’ Contract for Thermal Power Plants with NTPC
• Indian Oil Corporation Refinery Expansions to Conclude by December 2025
• SBI Ventures Plans to raise INR 2,000 Crore Climate Fund

• Last week, China’s RmbB12tn debt swap plan fall short of investors’ expectations. The pattern of trying to control the release of stimulus and manage the expectations is obvious;
• We notice that the government has injected more-than-required liquidity to the bank system. Such magnitude can only be explained by preparation for a long, drawn-out war; 
• MOF’s injection to banks to beef up capital adequacy ratio likely indicates the amount of stimulus that is about to happen to reflate the balance sheets of the local governments.

• The WTR Sustainable Index was up 3.6% W/W versus the S&P 500 Index (up 4.7%), the Russell 2000 Index (up 8.6%) and the Nasdaq Index (down 3.7%).
• Energy Technology (13.8% of the index) was down 0.3%, while Industrial Climate and Ag Technology (48.0% of the index) was up 5.3%, ClimateTech Mining was down 3%, and Advanced Transportation Solutions (20.8% of index) was up 3.2%.
• Top 10 Performers: EXROF, FREY, GWTI-US, ZEV, BE, PSIX, NEOV, LICY, SMR-US

• Despite the US biofuels industry facing challenges in 2024, including oversupplied renewable credit markets, lower-than- expected voluntary demand, election uncertainty, and a drop in profits, the industry made progress in many areas, including the advancement of sustainable aviation fuel (SAF) projects and hubs.
• We highlight five biofuel trends that will continue to have an impact in 2025.
• In 2024, the lack of guidance from the US Treasury Department on the 45Z clean fuel tax credit continued to be a key source of concern among biofuels producers, SAF project developers, and farmers.

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Last week, election headlines and earnings dominated the news cycle.
• The Trump win could be positive for biopharma if RFK Jr.’s influence can be held in check.

• 2024 is shaping up to be another difficult year for cannabis investors.
• The lack of federal reform and Florida failing to pass Amendment 3 have dampened spirits and lowered expectations, stock prices, and valuations as we head into the new year.
• Below are five factors we expect to have an impact on the cannabis industry in 2025.

• The markets moved sharply higher on Tuesday’s election results, with the ‘risk-on’ trade, lower uncertainty, enhanced prospects for domestic manufacturing given the incoming administration’s views on trade, and hopes for a ‘lighter’ regulatory approach boosting stocks.
• The Water Tower Research Commercial/Contract Furniture Index was up 6.2% and the WTR Mass Retailers Index was up 4.7% for the week, while the WTR Residential Manufacturers & Suppliers Index was flat and the Home Goods Retailers Index was down 3%. The DJ30 and S&P 500 were both up 5% and the R2K was up 8.2%.
• How should we explain this divergence? The Commercial/Contract Index likely benefited from expectations for stronger GDP growth and better profits, both catalysts for corporate investment. 

• Stocks dropped sharply on Wednesday, with the Dow Jones Industrial Average experiencing its worst day in over a month
• All three major indexes logged their third consecutive day of losses on soaring Treasury yields, with the 10-year yield hitting 4.25%
• Lam Research (LRCX US)  shares rose nearly 4% after hours following better-than-expected Q1 earnings and revenue.

• Apple down hitting suppliers, with ARM and Qualcomm spat taking both lower. Watch Softbank for weakness.
• Tesla earnings smashing it out of the park, will help buoy EV related including Nidec – whose own numbers yesterday were positive.
• Texas Instruments +4% on numbers beat should help industrial elec names such as Rohm and Fuji Elec, despite lingering concerns.

• Naveen Jindal Group to Invest INR 2,160 Crore in Cement Expansion
• Bharti Airtel Secures CCI Nod to Raise Stake in Indus Towers
• Reliance Infrastructure to Invest INR 10,000 Crore in Defence Manufacturing

• U.S. stocks ended mixed on Tuesday as investors assessed rising Treasury yields and concerns over deficit spending post-election
• Ahead of Japan’s October 27 election, PM Ishiba and major parties pledge to raise minimum wage to 1,500 yen ($9.94) by 2029, a 40% increase from current 1,054 yen
• Aerospace stocks generally weaker overnight despite relatively strong results. GE Aerospace (-9%), Lockheed Martin (-6%) and RTX (-1%). 

• Nervous markets overnight with a number of earnings misses adding downside pressure.
• Tokyo Metro IPO kicks off today which should see strong demand especially from risk-adverse retail investors.
• Tokyo Metro grey market last Y1400 vs Y1200 listing price, although bookrunners are calling higher levels to start.

• 700 HK: Tencent’s <Delta Force> Global Version Launch Scheduled for December 5 (+)
• 700 HK: Tencent Meeting Announces Free Meeting Time Limit Reduced to 40 Minutes (+)
• BABA US/700 HK: New user installs reach new high in September (+/+)

• XPEV US: Xpeng MONA M03 suffers large scale delivery delays (/)
• 1810 HK: Government official announces that Xiaomi has developed a 3nm smartphone SoC (+)
• MNSO US: Toptoy Expands Stores to Southeast Asia (/ )

• A relatively quiet week for the markets as earnings growth through the start of earnings season, increasing confidence around the no/soft landing scenario, and China stimulus offset growing concerns over luxury spend.
• The WTR Commercial/Contract Furniture Index was up 2.2% and the WTR Residential Manufacturers & Suppliers Index was up 1%, while the WTR Home Goods Retailers Index was down 0.9%.
• The DJ30 and S&P 500 were both flat at +0.1%, while the R2K was up 1.2%. The WTR Mass Retailers Index was up 0.7%.

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Last week, LBPH was acquired, providing a boost to comps PRAX, MRNS, JAZZ, and DRUG.
• Biopharma M&A may start seeing an uptick after a slow summer.

• The WTR Sustainable Index was down 1.9% W/W versus the S&P 500 Index (up 0.9%), the Russell 2000 Index (up 1.9%) and the Nasdaq Index (up 0.3%).
• Energy Technology (13.2% of the index) was down 0.9%, while Industrial Climate and Ag Technology (48.4% of the index) was up 1.1%, ClimateTech Mining was down 5.8%, and Advanced Transportation Solutions (20.2% of index) was down 5.7%.
• Top 10 Performers: LTBR, AZRE, GEVO, NXH, HTOO, NGPHF, SMR, NRGV, PEGY, FTCI

• Stocks ended mixed on Monday as the 10-year Treasury yield rose to 4.18%, its highest since July, while investors braced for a busy week of earnings
• VF Corp’s stock dropped 8% after JP Morgan placed the company on its “Negative Catalyst Watch” list, citing wholesale challenges and ongoing traffic headwinds.
• SAP reported Q3 results post market close, with the stock gaining 4% after hours. Fujitsu should benefit from similar trends.

• If GAA is better viewed as a revolutionary change, it implies that Intel, Samsung and TSMC will transition to GAA with a largely level playing field 
• If GAA is better viewed as an evolutionary change, TSMC will carry forward its process technology leadership into its GAA transition, leaving it in the #1 position
• We think that the GAA transition is evolutionary, not revolutionary and posit that TSMC will continue to maintain its semiconductor process technology leadership through the transition.

• NVDA saving tech from a bigger pullback as the market takes profits ahead of earnings.
• Rates higher and causing a pullback in R/E related and the yen is approaching Y151.
• Disco’s better-than-expected outlook for HBM related equipment should leave more room for upside.

• I don’t think it’s been any secret that I’ve been a peak litho bear for quite some time. I think we are finally seeing reality hit the company and the stock. Let’s discuss earnings, and then I’ll talk about peak lithography and TSMC.
• ASML accidentally leaked earnings this week, and the leak wasn’t good. They beat Q3, but the issue was the outlook for next year and orders coming way below expectations. It’s funny because Q4 revenue is expected to accelerate, but no one is paying attention to that.\
• Memory was half of the measly 2.6 billion-order book and is likely driven more by DUV for HBM than logic High NA.

• PFC and BEML Sign MoU for Defence and Infrastructure Projects
• Zee Entertainment Seeks Settlement with SEBI Over the Governance Issues
• ONGC and BPCL Search for Global Partners to Build Greenfield Refineries

• New highs for Intuitive Surgical on the success on its Da Vinci surgical robot sets a good tone for Sysmex.
• R/E related plays including homebuilders jumping with Blackstone +8% in 2-sessions Thurs/Fri.
• Recruit is rapidly running out of buyback bullets, and while it may reload it is priced to perfection and is looking vulnerable to correction.

• U.S. stocks closed at record highs Friday, continuing a robust streak fueled by Netflix’s strong earnings
• In commodities, gold prices surged to a record $2,700 per ounce, driven by investor demand for safe-haven assets amid ongoing Middle East tensions.
• Essilor Luxottica, the world’s largest eyeglass manufacturer, increased its stake in Nikon from 5.10% to 7.38%

• U.S. stocks showed a “slightly bullish” trend this week, driven by stronger-than-expected September Retail Sales, which pushed the S&P 500 up 0.9%
• Japan’s stock market experienced a volatile week, with the Nikkei 225 Index declining 1.6% and the broader Topix Index down 0.6%
• ASML’s cautious guidance hit Japanese SPE Stocks, but AI-related chip demand remains “insane” according to TSMC

• Precious Metals and the associated equities have been a high-conviction investment idea for us in 2024
• Gold is up 39% YTD and a representative index of gold miners is up 32%
• Should we take the money and run? Is it over?

• The Global Emerging Markets Weekly summarises the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
• Macro data points: Chinese inflation, net exports, GDP growth, industrial production, and retail sales data.
• Companies mentioned:Taiwan Semiconductor (TSMC) (2330 TT), Alibaba Group Holding (9988 HK), Baidu (9888 HK)

• Australia has recommended against the approval of Eisai Alzheimer’s disease drug Leqembi. Daiichi Sankyo’s Enhertu received conditional approval in China for the treatment of non-small cell lung cancer.
• Nihon Kohden has revised its financial forecasts for H1FY25. Shanghai Junshi Biosciences’ toripalimab has been approved for marketing in India for treatment of recurrent or metastatic nasopharyngeal carcinoma.
• Akeso Biopharma raised ~$250M, for funding its R&D activities. Celltrion has filed phase 3 clinical trial application in Europe for Cosentyx biosimilar in patients with moderate to severe plaque psoriasis.

• Reportedly, Government of Pakistan is planning to enter into agreement with 5 power producers in Pakistan for premature termination of their Power Purchase Agreement (PPA). This includes 2 listed names, i.e. base power plant for Hub Power (HUBC), and Lalpir Power Limited (LPL), and 1 indirect listed name, Roush Power (through Altern Energy), and 2 unlisted players, Saba Power and Atlas Power.
• Based on the news reports, 4 of the above are set to sign agreement with the Governments, while 1 (HUBC) is expected to sign it soon.
• The objective behind early termination of these plants is to avoid any further capacity payments to the producers, thus taking one step ahead out of many to reduce power cost in the country. This step may result in benefit of Rs0.6/Kwh, as per news.

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