Thematic (Sector/Industry)

• Stocks fell sharply on Friday due to a weaker-than-expected July jobs report, raising recession fears.
• Amazon slid 8.8% after missing revenue estimates, while Intel dropped 26% on weak guidance.
• Fast Retailing reported an 8.1% year-on-year increase in domestic same-store sales for UNIQLO in June, marking four consecutive months of growth

• 8697 Japan Exchange and retail facing brokers such as Matsui, SBI, and Monex may do better with Cboe +4.3% given the outlook for increased trading amid higher market volatility. 
• Japanese MedTech firms Terumo, Asahi Intecc, and Olympus underperformed globally. While FX plays a role, lower rates boost elective surgeries, making them prime candidates for a rebound.
• NKY225 inclusion candidates 7453 Ryohin Keikaku and 7453 NRI look attractive as oversold longs as Index arbs will no doubt be rushing back as soon as the panic subsides.

• Lonking Holdings (3339 HK)‘s 2H24 earnings will benefit from accelerated special purpose bond issuance and a low base. Potentially higher dividend payout is another attraction.
• Shenzhen International (152 HK) may realise a partial gain from South China Logistics Park transformation and lower interest expenses in 2H24. Rmb appreciation will help, too.
• Dongfang Electric (1072 HK) should witness stronger order momentum in 2H24 as demand from transmission and generation upgrades surges. Order backlog now covers 3.5x revenue.

• In this insight, we look at the latest policy support in China property, as well as the latest rate cut from the Central Bank
• In the physical market, there are some signs of bottoming out, particularly in key cites such as Shanghai and Shenzhen.  Secondary market is recovering
• If investors would like exposure in the sector, we recommend CRL (1109 HK) and COLI (688 HK), both are SOE names with almost zero bankruptcy risks

• The Global Emerging Markets Weekly summarizes the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
• Macro data points: Chinese PMI, South Korean exports and inflation data.
• Companies mentioned:Alibaba Group Holding (9988 HK), Tencent (700 HK), ByteDance (1439927D CH)

• The Bank of Japan’s decision to raise the overnight rate to 0.25% significantly impacted financial markets this week
• The Federal Reserve’s decision to keep rates unchanged fueled concerns that it might be lagging in rate cuts.
• Advantest’s share price surged 15% this week due to a positive outlook and strong Q1 results

• Over 90 resources companies released their quarterly reports on the last day of July, representing 15-20% of ASX-listed resources companies
• Companies such as MC Mining, Bastion Minerals, and QX Resources reported financial struggles and cash balance concerns
• Some companies, like Forrestania and African Gold, disclosed significant expenses on staff, admin, and related party transactions, raising questions about financial management and transparency.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• The single most complicated question to answer is what exactly the ROI of AI is.
• You can easily argue that there is some value and that it can be done quite profitably when you are just inferencing the model for money.
• The problem is that when you peer a little closer at the training costs, particularly the cost of scaling models at the frontier, it’s starting to become hard to answer. What exactly is the ROI?

• Tata Motors plans to split into TML Commercial Vehicles and a merged PV, EV, and JLR entity, creating focused companies.
• TVS Motor’s July sales rose 9%, with EV sales soaring 61%, reflecting strong growth.
• Hero FinCorp seeks INR 3,668 crore through an IPO, aiming to boost capital for lending activities.

• China’s lithium supply glut is worsening, with output expected to expand by 41% this year, fueling a steeper downward trend in prices for this material, a crucial component of electric vehicle batteries.
• China’s domestic production of lithium carbonate is expected to reach 650,000 tons, a year-on-year increase of 41%, according to Fan Runze, a senior industry analyst at research institute Antaike.
• With more supply expected to be released in the second half, lithium prices could drop to their lowest point of the year, said Fan at a Wednesday conference.

• The headline from The Nikkei is incredible: “NY Office Building Sold at ‘97% Discount.’ This is a 23 floor building in midtown Manhattan which had 35% occupancy, built in 1960’s.
• Banks hold office buildings as collateral for their CRE loans, basically. They also hold other buildings at collateral, like shopping malls and strip malls.
• The risk for US banks from worsening collateral values in CRE is much greater at small US banks (outside the largest 25 by assets) where they have high exposure.

• Feature article: Solid IICs, cash-consolidating REIFs Since the beginning of 2024, the share prices of Infrastructure Investment Companies (IICs) and Renewable Energy Infrastructure Funds (REIFs) have generally remained lacklustre, failing to recover from the losses experienced in 2023.
• A significant factor contributing to this trend has been the sharp rise in interest rates since 2021, which has negatively impacted the sector due to the increased yields on “risk-free” 10-year gilts.
• The recent change in the UK government may bring some relief, with potential relaxations in planning approvals for new onshore wind and solar plants.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• Ola Electric (1700674D IN) ‘s IPO launch, pricing, valuation and an attempt to peek into its yet undefined future growth in the rapidly expanding EV space.
• Alcoholic beverage industry is not really in high spirits post-COVID. Worst could be past for Budweiser Brewing APAC (1876 HK) with likely recovery in premium beers and commodity price tailwinds.

• ADX Energy (ADX AU)C; target of A$0.75 per share: Reflections on Welchau – IIndependent consultants have calculated that each of the three reservoirs encountered at Welchau (Reifling – 128 metres, Steinalm -118 metres and the Guttenstein – 111 metres) are hydrocarbon bearing with uncertainty on the hydrocarbon type.
• Laboratory work on the Steinalm reservoir has confirmed the full properties ofthe 43° API light sweet oil that was recovered in an MDT sample run in the Steinalm Formation.
• The vertical extent of this light oil in the Steinalm or in the shallower Reifling and deeper Guttenstein is uncertain and there is no clear evidence of a hydrocarbon-water contact in any of the reservoir formations based on the open hole wireline log data.

• Stocks tumbled on Thursday, with the Dow Jones dropping 494 points amid recession fears
• Japan’s manufacturing PMI fell to 49.1 in July, indicating contraction. New orders declined due to weak domestic and international demand
• Hitachi’s Q1 net profit surged 2.5-fold to 175 billion yen, driven by strong AI-related demand in IT services and power distribution

• Big tech reversal after yesterdays gains and a horrible earnings print for INTC sends it -20% in AH trading setting a very bleak tone for JP tech
• AMZN miss after-mkt on its e-commerce seller services and advertising will weigh on likes of 4755 Rakuten and 4689 LY Corp.
• Flight to perceived safety in names such as P&G, CL and KMB may provide a bid for related plays in JP such as 4452 Kao, 4912 Lion, and 8113 Unicharm.

• Many Chinese solar manufacturers slowed or halted production altogether in the first half of this year, as they struggled to survive amid overcapacity and an ensuing price war, prompting an industry group to call for faster consolidation among the firms.
• “It’s rare for the whole industry to lose money,” Wang Bohua, honorary chairman of the China Photovoltaic Industry Association (CPIA), said at a solar conference in the eastern province of Zhejiang on Thursday.
• “Among the companies in the main industrial chain that have released their half-year forecasts, most are in a state of loss,” Wang said.

• JSW Cement bids for CK Birla’s stake in Orient Cement, reflecting ongoing industry consolidation.
• Dixon plans new Chennai plant for laptop production, expanding IT manufacturing capabilities.
• IndiaMART shares fall after weak subscriber growth, despite strong profit and revenue increase.

• High level macro themes include challenges of semiconductors in China and broader consumer trends
• Overall sentiment in China remains relatively positive despite concerns in the semiconductor industry
• Huawei’s comeback and success in the semiconductor market is contributing to increasing optimism in the industry, especially in the electronics sector

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• BZ US: Enterprises’ Recruitment Confidence Shows Slight Recovery in July(+)
• 3690HK: Meituan and Restaurant Brands Collaborate to Establish Take-out Satellite Stores, Further Penetrating Offline Catering in China.(+)
• PDD US/BABA US /SHEIN/SE US: Hundreds of Temu merchants protest at Guangzhou headquarters (-/+/+)

• Macro News Update: Central Economic Work Conference in July shifts focus of short-term economic efforts to promoting consumption.（+）
• LI US/1211 HK/1810 HK/ NIO US/ XPEV US: New energy vehicle deliveries generally rose in the 30th week of 2024, with BYD, Ideal and Xiaomi hitting new highs （/////////）
• BEKE US:A subsidiary of Beike acquires two commercial and residential land in Xi’an (/)

• Stocks rallied on Wednesday as the Federal Reserve maintained interest rates, underscoring progress against inflation.
• Megacap tech stocks rebounded strongly, with Nvidia soaring 12.8% after rival AMD’s positive results boosted semiconductor sector optimism
• The Bank of Japan raised interest rates to 0.25% and announced a bond tapering plan, signaling confidence in economic recovery and addressing yen weakness

• The overall textiles sector especially in FY23 was dull and witnessed difficulties across the industry and especially on the exports side.
• However, the union budget 2024 has provided several positives for the textiles industry in general, especially on the MSMEs side. 
• If things go well, the sector is poised for a turnaround and can be the theme of the year.

• BHP bullish on copper, bearish on iron ore due to buying Filo with Lundeens
• FMG share price down nearly 40% with export volumes shrinking and rising costs in WA operations
• Iron ore prices break below $100/ton for the first time in a while, China steelmaker Jiangsu DeLong facing counterparty risk and property market struggles due to lack of demand and unfinished projects

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Nicotine alternatives like zins and nicotine gum are becoming increasingly popular
• Sales of these products have skyrocketed, leading to shortages
• The regulatory landscape around nicotine products is complex and constantly evolving

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• SEBI proposes measures to curb speculative trading in index derivatives, including rationalizing options strikes and increasing contract sizes.
• High retail losses in derivatives trading prompt SEBI’s intervention to enhance market stability and investor protection.
• SEBI’s actions emphasize cautious participation and regulatory oversight in the highly speculative derivatives market.

• Covid created unusual demand trends causing some companies to invest in the wrong areas
• Current consumer landscape is cautious with consumers spending less due to inflation and interest rates
• Market is cautious on consumer sector, presenting buying opportunities for quality companies

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Airtel repurposes 4G spectrum for advanced 5G, launching Standalone and Non-Standalone modes soon.
• HPCL aims to start LNG terminal in December, seeking long-term import deals and expansion.
• Vedanta’s demerger plan approved by creditors, creating six independent entities to manage debt.

• Meta and MSFT commented they are seeing benefits from their AI investments, pointing to increased capex positive for JP SPE names.
• Advantest upgrading its tester market outlook for both SoC and memory over a solid 1Q earnings print will be positive for 6871 Micronics ahead of numbers.
• Japan off the China export ban for now, however the US is unlikely to rollover and allow China unfettered access to cutting edge tech.

• Total public EV charging stations (incl. temporary unavailable locations) were 71,129 as of July 30, 2024. Compared to the end of FY23, it is an increase of 10.0%.
• Total EVSE charging ports (including the temporary unavailable ports) were 190,454, up nearly 13.1% compared to the end of 2023 and up 1.3% over June 2024.
• US considerably lags behind China which had 3.05 million public charging stations at the end of May 2024.

• The S&P 500 fell 0.5%, pressured by declines in megacap tech stocks as investors awaited key earnings reports
• Toyota retained its position as the world’s top automaker in the first half of 2024, selling 5.16 million vehicles globally
• Shimano revised its fiscal year 2024 net profit forecast up by 8% to 77 billion yen,  driven by strong sales of high-priced bicycle parts in China

• Weak performance in the tech sector with dampened sentiment towards AI and semiconductor stocks. Microsoft’s stock price fell after market pulling other large caps lower
• US homebuilders were strong with Lennar +1.3%, Dr Horton +1%, after S&P CoreLogic home prices topped expectations in a good read for 1911 Sumi Forestry and 1928 Sekisui House
• TDK’s strong 1Q OP beat estimates, driven by HDD and energy products. MLCC sales fell, which may negatively impact Taiyo Yuden, while Murata missed estimates.

• BABA US/PDD US/JD US: Alibaba overhauls Taobao/Tmall merchant fees (+/-/-)
• NTES US: NetEase’s <Naraka Mobile> Ranks 3rd on China iOS Grossing Chart on First Day, Performance In Line with Expectations (+)
• TCOM US/ATAT US: Hotel RevPAR Drops 9% YoY in July MTD (-/-）

• Tencent’s game performance was mixed. <DnF Mobile> continued to perform well, with popularity increasing after the summer update. <Peacekeeper Elite> saw a natural decline due to the game’s lifespan.
• NetEase’s <Naraka Mobile> launched on July 25 and showed an impressive performance with a large influx of players. It is expected to be a blockbuster with billions in annual grossing
• Bilibili’s <FGO> surged to fifth place on the grossing chart after its anniversary event, demonstrating the strong spending enthusiasm and loyalties of players for this nearly decade-old game.

• L&T wins contracts for key grid infrastructure in India, Saudi Arabia, UAE, advancing clean energy.
• Airtel re-farms mid-band spectrum to boost 5G speeds and coverage, launching SA technology soon.
• Adani Total Gas reports 20% profit rise, driven by higher CNG and PNG sales.

• LKNCY US:Luckin Coffee’s Moutai Flavored Latte is Gradually Being Phased Out (-)
• 1519 HK/ZTO US: Weekly parcel volume grew ~33% y-o-y (+)
• 981 HK/1810 HK/AAPL US/NVDA US: SMIC’s upcoming N+3 process to narrow performance with TSMC’s 5nm (+/-/-/-)

• US stocks closed mostly flat on Monday, starting a significant week that includes a Federal Reserve rate decision, the July jobs report, and Big Tech earnings
• Japanese luxury market thrives due to Chinese tourists exploiting the weak yen. Brands like Gucci, Burberry, and LVMH report strong sales in Japan, contrasting global trends
• Hong Kong’s activist investment fund Oasis Management acquired about 5% of Pasona Group; Murakami takes 5.05% of Heiwa Real Estate. 

• Coal India advancing 119 projects to increase coal production, aiming for 1 billion tonnes by 2025-26.
• Adani’s $4 billion PVC project resumes, targeting India’s PVC demand with 2 million tonnes capacity.
• ITC plans Rs 20,000 crore investment, focusing on FMCG, paperboards, packaging, and hotel business demerger.

• This is going to be a big week, so I’ll be as brief as I can while getting everything in one place.
• Let’s start with Automotive, which is my favorite idea set right now. The problem is that the near-term results were much weaker than I expected, and it looks like the bottom is maybe in.
• I was expecting another quarter of scrapping along the bottom, and Industrial weakness punched a new low.

• Budget 2024 introduces revised income tax slabs, increased standard deductions, and changes to capital gains taxation, including higher rates and updated exemption limits.
• Key updates include reduced surcharge rates for high earners, higher capital gains taxes, and increased STT on F&O, affecting investor returns and compliance.
• The budget’s changes simplify tax structures but increase tax burdens on capital gains and trading, requiring adjustments in investment strategies and tax planning.

• Positive CEO comments on Silicon Carbide (SiC) from ON Semi could be beneficial for Rohm which has significant SiC exposure.
• Tesla’s 5.6% rise after Morgan Stanley named it a top pick in the US auto sector may help buoy sentiment for the beleaguered Panasonic with Tesla as it’s major customer.
• Names in Factory Automation with strong China exposure may benefit from Fanuc’s stronger-than-expected Q1 results, driven by government subsidies and growth.

• The market rotation continued to benefit many of the stocks in the Water Tower Research Furniture and Furnishings indexes.
• The Water Tower Research Commercial/Contract Furniture Index was up (+5.5%) and Home Goods Retailers Index was up (+4.7%) for the week, while the Residential Manufacturers & Suppliers Index pulled back slightly (-1.4%) overall, even as many individual issues within the index continued higher, as the rotation to smaller-cap and value stocks continued with the S&P 500 and Dow 30 (-1.9%) down, while the R2K (+1.8%) continued higher.
• The Water Tower Research Mass Retailers Index was down modestly (-0.4%).

• Last week, IONS matched Ultragenyx’s Angelman benefit, with maybe better safety.
• PFE and SGMO had approvable gene therapy results in hemophilia A, but durability remains a question.
• BIIB had a bad week, as SAGE-partnered essential tumor trial failed and ESAIY-partnered lecanemab in Alzheimer’s hit an EU regulatory wall. 

• US stocks ended a volatile week on a positive note as promising inflation data bolstered investor sentiment.
• KEYENCE reported a net income of 93.5 billion yen for April-June 2024, a 10% increase year-on-year and a record high for the fourth consecutive year
• Strategic Capital acquired a 5.02% stake in Yellow Hat, as revealed in a large shareholding report submitted to the Kanto Finance Bureau.

• Despite management’s plans for buybacks, restructuring, and debt reduction, Sanken’s stock fell below preannouncement levels and appears mispriced. 
• Strong results from US homebuilders and the Electronic Materials sector suggest positive momentum for Japanese firms like Sumitomo Forestry, Sekisui House, and Shin-Etsu.
• With 50% of operating profit coming from China, Screen is vulnerable to US trade restrictions. Despite a positive earnings report, concerns over these issues may dampen sentiment

• The Global Emerging Markets Weekly summarizes the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
• Macro data points: South Korean and Thailand GDP growth data.
• Companies mentioned:Kakao Corp (035720 KS), Tencent (700 HK), Samsung Electronics (005930 KS)

• The Topix declined by 5.6%, while the Nikkei lost almost 2,400 points, or 6%. However, equities took a back seat to the FX market
• Given the currency movements and the global tech sell-off, it’s no surprise that the worst performers were semiconductors (-10%) and autos (-9%).
• The recent market movements appear to have been driven primarily by macro events, particularly the yen’s reversal, which impacted high beta and momentum stocks.

• 1797 HK/JD US: Popular live streamer Dong Yuhui leaves East Buy (-/+)
• BABA US/PDD US: AliExpress receives small fine in Korea due to data privacy violation (+)
• Chinese Gaming Industry: Games Can Now Be Filed for Testing Without Approval of Game Code, Guangdong Province Leads the Way  (+)

• Wheat trading sideways on weather concerns, but bearish sentiment driven by ample supplies is likely to prevail.
• Corn prices rally significantly driven by unfavorable weather conditions and strong export demand. Analysts expect bearish turnaround.
• Soybeans recover on US presidential election uncertainty; but speculation is overshadowed by persistent concerns over Chinese demand.

• Industry executives attending the World AI Conference in Shanghai expressed concerns about recurring technological issues in the development of large language models (LLMs) and offered possible solutions, as demand for more reliable artificial intelligence (AI) models designed for sector-specific software grows stronger.
• The issues also come as China’s tech titans have kicked off a new round of price cuts for their AI models, extending a fierce price war in an effort not to lead the industry but to gain more users for their cloud businesses — a key resource for AI developers.
• Xu Li, CEO of Chinese facial recognition and AI specialist SenseTime Group Inc.

• Bajaj Auto to invest INR 800 crore in Maharashtra to boost electric three-wheeler production.
• Emami plans to fully acquire The Man Company, enhancing its digital-first brand portfolio.
• WeWork India to launch new workspaces in Bengaluru and Noida, addressing flexible workspace demand.

• AUCTUS PUBLICATIONS ________________________________________ ADX Energy (ADX AU)C; target of A$0.75 per share: Diversified and high impact newsflow over the balance of 2024 – ADX has confirmed a very busy programme of activity from September.
• The overall unrisked value of the programme is ~A$1.70 per share, which represents 17x the current share price.
• In early September, ADX will drill the Anshof-2A side track.

• We look at the global macro themes that are impacting the equity market including the US election, the Fed and China’s latest rate cut
• We also look at the latest condition in Hong Kong, including the rates, the economy and the physical RE market
• HK RE stocks continue to trade at compelling valuation, but fund flows are needed if we want a re-rating

• 1810 HK/AAPL: Xiaomi’s China unit volume grew 17% yoy in 2Q (+/-)
• 1810 HK: Xiaomi acquires more land to build another EV factory (+)
• 981 HK/1810 HK: SMIC’s upcoming “5nm” process to feature significant efficiency improvement (+/-)

• Nearly six out of 10 of China’s trust companies saw their revenue and profit decline in the first half of 2024, reflecting challenges amid a regulator crackdown on an industry plagued by scandals.
• Among the 53 trust companies that have published their unaudited first half financial results, 13 reported net profits of less than 100 million yuan ($13.8 million) and three posted net losses.
• About 60% of trust companies saw year-on-year declines in operating revenue, total profit and net profit in the first half, underscoring significant business pressure and performance disparities among companies, according to a research report by China Credit Trust Co.

• We call the communique courageous because it pressed ahead on three fundamental, long standing issues of Chinese economy: fiscal revenue, social security and over-capacity;
• But we question its timing as well as the wisdom of staunch refusal to print money to revive consumption. In our view, such measure doesn’t run counter to the communique;
• We believe the likelihood points to prolonged slow recovery in consumption, investment, job market and eventually manufacturing. But we see positive momentum in healthcare, infrastructure and eventually consumption.

• US economy grew at a faster-than-expected 2.8% in the second quarter.  
• Nasdaq Composite dropped 0.95% on Thursday, extending losses as investors sold off leading 2024 tech stocks
• Canon forecasts a 27% increase in net profit to 335 billion yen for fiscal year 2024, reaching a 17-year high

• Intraday trading surged from 1.5 million traders in FY19 to 6.9 million in FY23, driven by accessibility and financial literacy.
• Despite rising participation, 71% of intraday traders incurred losses in FY23, highlighting the risks and need for careful trading.
• The high losses among new traders emphasize the importance of experience, risk management, and informed decision-making in intraday trading.

• China is expected to be the largest national market for commercial airplane deliveries through 2043, Boeing Co. said, as the U.S. company resumed deliveries of its cash-cow 737 Max jets to Chinese airlines after a two-month pause.
• Boeing predicts 43,975 new commercial airplanes will be delivered globally over the next 20 years, according to its 2024 Commercial Market Outlook released Friday. That’s up from last year’s forecast of 42,595 aircraft.
• The manufacturer raised its forecast because it believes that air travel will have fully recovered from its pandemic-era slump by then, with demand even surpassing pre-pandemic levels, according to a press release about the Outlook.

• The GLP-1 market is evolving at a rapid pace, and we have quickly moved onto the development of a triple agonist drug.
• First mover advantage is expected to lose steam as more effective GLP-1s are launched.
• Scary side effects; challenged patents and strong competition will favour the cost-effective producers.

• HDFC Bank raises fixed deposit rates to 7.35% and 7.40% for specific tenors.
• Adani Green Energy starts 250 MW wind project, boosting total capacity to 2,250 MW.
• EQT exits RBL Bank with Rs 1,100 crore stake sale; shares drop 3%.

• Heavy lithium. Halfway through the year, the S&P 500 has appreciated 15.4% YTD, driven by the strong performance of the Magnificent Seven, even as the remaining 490+ companies saw their stock prices move more in line with the Russell 2000, which itself posted an 7.8% gain YTD.
• Over the same timeframe, the WTR-CMI Index delivered a disappointing 4.4% gain under the weight of lithium and graphite companies losing 36-62% of their value due to collapsing lithium and synthetic graphite prices, driven by slower growth of EVs and steel production and liquidation of excess inventories by customers, built over the course of 2022-23.

• Sticky costs remain as pricing power wanes. Over the course of 2022-23, many companies experiencing a rapid rise in raw material costs, driven by higher petrochemical prices and rising costs of transportation and logistics aggressively raised prices in an attempt to preserve profits, if not profit margins. 

• US semiconductor restrictions are limiting China’s access to advanced AI accelerators, causing a widening gap in AI compute. The US will expand its lead over China to ~7x by 2025.
• Although China has domestic alternatives, bottlenecks due to separate US restrictions on semiconductor equipment are hindering yields and capacity expansions, effectively limiting China’s capacity to train state-of-the-art AI models.
• To maximize AI compute, Huawei will likely curtail smartphone semiconductors in favor of AI accelerators. We expect manufacturers offering mid-end Android devices like Xiaomi Corp (1810 HK) to benefit first.