Thematic (Sector/Industry)

• U.S. stocks plunged on Wednesday, driven by a 3.6% drop in the Nasdaq Composite
• Canon Marketing Japan announced a tender offer to buy back up to 90 billion yen of its own
• Furukawa Electric will build new plants in Japan and the Philippines to produce water-cooled systems for data centers

• Paytm and Axis Bank collaborate to enhance POS solutions, integrating advanced card payment devices.
• Gland Pharma and Zydus Lifesciences secure key USFDA approvals for new medications.
• Tata Consumer announces a Rs 3,000 crore rights issue to bolster financial position and growth.

• Equity analysts spend most of their time trying to get a handle on what is going to happen over the next 12-24 months for the companies that they follow.
• Much of the focus is on ‘the numbers’. But sometimes it’s useful to pause and take some time to think about the big picture factors that could affect the industries and companies we care about.
• In this industry report, we talk about five of the current themes and one trend we have been thinking about, with an eye on how they may affect the furniture and furnishings industries (both residential and contract/commercial) going forward

• Major indices surged, led by Rambus +9.14% signaling strong tech sector momentum.  However there is continued weakness for auto related chips and a lower cyclical demand in industrial IC’s.
• CrowStrike continued it’s significant drop, with CEO to testify on outage; increased interest in rivals like Trend Micro suggests potential market share shifts in security software. 
• Kyushu Rail announced a 15% rail fare hike effective April 2025, leading to a +6.78% surge; tech industry growth in Kyushu will impact infrastructure-related firms positively.

• US Stocks were flat ahead of key tech earnings. Both Alphabet and Tesla posted mixed results, with share prices falling after-hours
• Nidec revised its FY2025 forecast, expecting a 48% year-on-year increase in net profit to 185 billion yen
• Hitachi will sell its 40% stake in its air-conditioning joint venture with Johnson Controls International to Bosch

• Nvidia gave guidance for significantly slower Q/Q growth in Q2
• Nvidia and its HBM suppliers have told of shortages, driving hyperscale datacenters to build excess inventory
• At the first sign of softness, Nvidia’s customers are likely to enter a digestion phase, drastically reducing orders

• 9 Key Sectors for generating opportunities for India in Budget: Agri, Employment, Inclusive development, Manufacturing and Services, Urban Development, Energy, Infra, Innovation & R&D, NexGen reforms. 
• The overall tone of the Union Budget 2024 emphasizes support for MSMEs, Infrastructure, defence, and youth development.
• The budget’s focus on diverse sectors and inclusive development strengthens confidence in India’s long-term economic resilience and growth trajectory.

• The Economic Survey 2024 emphasizes long-term strategies for India’s “Amrit Kaal” goals, highlighting sustained economic growth, climate action, and sectoral advancements.
• India’s GDP grew by 8.2% in FY24, with key sectors like agriculture, manufacturing, and electronics showing strong performance. The government focuses on bottom-up reforms for sustained growth.
• The survey’s emphasis on strategic, long-term growth and resilience reinforces confidence in India’s economic future, aligning with the vision for a “Viksit Bharat” by 2047.

• India’s CCI intensively scrutinizes Reliance-Disney $8.5 billion merger amid major antitrust concerns.
• Eureka Forbes, under new leadership, plans extensive distribution network growth and product launches.
• Suzlon’s Q1 consolidated net profit soars 200% YoY, reaching ₹302 crore with a 50% revenue increase.

• 3690 HK/TCOM US: Online catering is robust in 2Q24, while online tourism diminishing quickly（+/-）
• 1024 HK: Source said Kuaishou’s video generation LLM, Kling AI, has surpassed one million total application users.（+）
• 3690 HK:Meituan may launch food delivery service in Riyadh in September or October this year (+)

• Macro News Update: Our take from the decision draft of the CCP 3rd Plenary Session
• 1519 HK/ZTO US: Weekly parcel volume shows 31% y-o-y growth (+)
• 1810 HK/981 HK: Huawei’s mid-premium Nova 13 smartphone to be delayed (+//)

• Inflation and Market Dynamics: In this letter, we discuss persistent inflationary pressures and potential misallocation of capital in financial markets that could lead to future economic instability.
• Of specific concern is persistent under-investment in the Real Asset Ecosystem, which includes commodity producers and industries with significant vertical linkages to commodities, an ecosystem of businesses that ensure sustainable economic growth and stability.

• We review our Enviox and Siemens Energy investment thesis and explain continued confidence in our lithium investments despite widespread negative EV sentiment.

• The WTR Sustainable Index was down 3.6% W/W versus the S&P 500 Index (down 2.0%), the Russell 2000 Index (up 1.7%) and the Nasdaq Index (down 4.0%).
• Energy Technology (14.4% of the index) was down 8.1%, while Industrial Climate and Ag Technology (59.6% of the index) was down 1.7%, ClimateTech Mining was down 7.0%, and Advanced Transportation Solutions (20.7% of index) was down 6.0%.

• Top 10 Performers: ARVL, ZAPP, NAAS, VMC, PEGY, QS, LCID, OUST, EVGO, COMM

• The US Biosecure Act may restrict federal sourcing from China, boosting India’s pharmaceutical manufacturing.
• India’s CDMO market is expected to double in three years, significantly enhancing global competitiveness.
• Strategic investments in India’s pharmaceutical sector now appear more promising and potentially lucrative.

• Aehr had a messy print, with the core business actually weaker than expected as they incorporated their recent acquisition. It’s hard to stay bearish, as they have a lot of potential product launches coming.

• TSMC beat gross margins despite everything because of higher utilization. The logic cycle is starting to kick off in earnest. I believe WFE Capex will be much higher next year.

• ASML talked up high-NA DRAM insertion on 25/26. Only Samsung could do it. Good luck, Samsung!

• Nvidia led the tech recovery, surging 4.8%, with Meta and Alphabet also posting strong gains.
• Goodyear Tire & Rubber is selling its off-the-road equipment tire business to Yokohama Rubber for $905 million
• Mitsubishi Heavy Industries has contracted with Airbus to supply emergency doors for A321neo planes, diversifying from its reliance on Boeing

• The Union Budget 2024 expectations: Focuse on job creation, rural support, and domestic manufacturing, aiming to drive economic growth and self-reliance.
• Employment, housing and Manufacturing will be the key priorities for Modi 3.O.
• This Budget can see some Taxation benefits for middle-class salaried individuals by offering improved tax incentives and a simpler tax system.

• FM Nirmala Sitharaman prepares to unveil the Union Budget for the fiscal year 2024-25 on July 23rd.
• Movement of Sensex and Nifty around the Budget day and post that.
• What sectors performed best and worst during the last 10 budget days?

• Markets fell with Russell -0.63%, SPX -0.71%, Nasdaq -0.93% and SOX -3.11%. UST10 rose 0.88% and the yen weakened to Y157.48. Commodoties fell.
• CRWD -11.1%, MSFT -0.74%, and power semis (Wolfspeed -7.17%) fell due to a CrowdStrike IT outage and Trump-related EV concerns respectively, showing sector vulnerability.
• Stocks with China exposure fell sharply due to US export restrictions, with Disco -23.1%, TEL -18.1%, Screen -17.8%. Intuitive Surgical surged on strong Q2 results and da Vinci 5 launch.

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Roche Holding Ltd. (RHHBY) reported initial Phase 1 data for oral GLP-1R agonist CT-996 in obesity patients, showing a 6.1% placebo-adjusted weight loss (p<0.001) at four weeks.
• While the weight loss compares favorably with approved injectables at four weeks (1-3% adjusted), the lack of details in the CT996 data, like baseline body weight, limits any cross-trial comparison. 

• Cannabis stocks started strong last week but faded on Friday. MSOS dropped 2.50% over the five sessions, while YOLO fell 1.73%.
• Ascend (CSE: AAWH, OTCQX: AAWH) rallied 12.18% following its debt refinancing, while Jushi (CSE: JUSH, OTCQX: JUSHF) lost the most at -9.84%.
• Ascend (CSE: AAWH, OTCQX: AAWH) announced on Monday it successfully refinanced its debt.

• Rotation into smaller-cap and value stocks continues.
• The Water Tower Research Commercial/Contract Index (+1.2%) and Residential Manufacturers & Suppliers Index (+2.4%) benefited, while the Home Goods Retailers Index (-2.1%) was weighed down, in part, by bankruptcy concerns for CONN.
• The Mass Retailers Index (-2.4%) was affected by weakness in growth stocks, giant caps, and technology components of the market. 

• The S&P 500 dropped 0.7% and the Nasdaq Composite declined 0.8%, both marking their worst week since April
• Speculative short positions in the yen have dropped significantly following Japan’s suspected yen-buying intervention
• Effissimo Capital Management, an activist investment fund, acquired 6.03% of Teijin’s shares

• Irate U.S. politicians have gunned down their own tech sector, triggering declines of 7% to 20% among leading semiconductor equipment stocks outside China. 
• We expect a bounce after such large declines – and further gains for Naura and AMEC in China. 
• Investors now face difficult questions about the future of Chinese demand, the sustainability of the AI boom, and valuations. We are not optimistic.

• All three Chinese airlines trimmed their losses in 1H24, suggesting a pick-up in sector fundamentals. However, their 2Q24 bottom line displayed different trends.
• Air China Ltd (H) (753 HK) is performing the best, with QoQ improvement in both reported and recurring losses (reduction by 41.7% and 7.4%, respectively).
• China Southern Airlines (1055 HK), however, dipped back into red in 2Q24 after making a profit in 1Q24. With Air China underperforming YTD, there is room to revenge in 2H24.

• 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 GDP growth, retail sales, and industrial production, Indian inflation data, and Malaysian GDO growth.
• Companies mentioned:Kakao Corp (035720 KS), Samsung Electronics (005930 KS)

• Wheat Prices declined over a large US harvest forecast, but bargain buying and strong demand over cheaper Russian wheat offered support.
• Corn Prices declined but tighter stocks kept a leash on losses. Weather concerns in Ukraine and the US provided some support, while record high ethanol production suggests strong demand.
• Soy Prices fell the most due to ample global supplies and doubts about Chinese demand. A larger Brazilian crop estimate adds downward pressure.

• The Nikkei lost over 1,000 points this week as political uncertainty impacted markets. 
• In terms of sectors, the semiconductor sector took the brunt of the selling in Japan. Disco, Advantest, Tokyo Electron, Screen, Lasertec and Ulvac were amongst the worst performers
• Small cap stocks performed well in Tokyo. SanSan’s share price rose 31% following a strong financial report and positive forward guidance.

• The market had mixed results with SOX +0.51%, Nasdaq -0.7%, SPX -0.78%, and Russell -1.85%. UST10 yields rose 1.07% to 4.2%, and the yen weakened to 157.36. 
• Commodities saw copper -2.6%, nickel -0.2%, and Brent crude -0.34%. Tech stocks varied, with Monolithic Power and Broadcom up while power semis fell. Semiconductors started strong but ended mixed.
• Japanese homebuilders with large US exposures may be strong. 6146 Disco expected to dip. Intuitive Surgical rose 5% on strong 2Q results, which could positively impact 6988 Sysmex. 

• Condor Energies (CDR CN)C: Signing first LNG framework agreement in Kazakhstan – Condor has signed a first LNG Framework Agreement for the utilization of LNG to fuel Kazakhstan’s rail locomotives.
• The agreement was also signed by Kazakhstan Temir Zholy (KTZ), the national railway operator of Kazakhstan and Wabtec Corporation, a U.S. based locomotive manufacturer with existing facilities in Kazakhstan.
• KTZ and Wabtec previously signed a memorandum of understanding which includes modernization work to retrofit KTZ’s mainline locomotive fleet for LNG usage and incorporate LNG into new build locomotives.

• SEBI proposes a new asset class to bridge the gap between mutual funds and portfolio management services, requiring a minimum investment of INR 10 lakh.
• The new class targets sophisticated investors, offering higher-risk products and strategies, while ensuring regulatory compliance to curb unauthorized investments.
• This initiative provides a regulated, higher-risk investment option for investors, encouraging innovation in AMCs’ investment strategies while enhancing market depth and investor protection.

• DOW +0.59%, Russell -1.06%, SPX -1.39%, Nasdaq -2.77%, SOX -6.81% as investors shifted from growth to value stocks. UST10 was flat at 4.16%, and the yen strengthened to Y156.18.
• Commodities were mixed with copper -0.3%, nickel -0.83%, and Brent +1.72%. Energy and consumer staples rose, with VSF +13.6% after Essilor Luxottica agreed to buy Supreme. US homebuilders lost ground. 
• Tech stocks fell sharply after ASML’s earnings missed estimates and news of potential US export restrictions to China. Focus on SPE names with high China exposure as shorts.

• Tech stocks continued their decline on Thursday, with the Nasdaq Composite falling over 0.7% following its worst day since 2022
• Dalton Investments, a US activist fund, acquired a 5% stake in Ezaki Glico, becoming its fourth-largest shareholder.
• TSMC reports that AI chip constraints will persist until 2025, despite exploring new packaging technologies

• Tata Power’s INR 20,000-crore investment in renewables to boosts clean energy
• Zee Entertainment’s $239 million FCCBs plan: Raises funds to bolster financial position
• India to approve INR 70,000-crore warship order: Advanced warships with Indigenous components

• 700 HK: Tencent’s <Civilization Mobile> Officially Launches, Ranks Second on iOS Download Chart.（+）
• JD US/PDD US/BABA US : JD to launch new monthly promo event “Super 18” (/)
• PDD US: PDD announces new requirements for some merchants (+)

• BZ US: Age 16-24 unemployment rate declined for three consecutive months, mainly driven by the manufacturing sector.（+）
• LI US/NIO US/XPEV US/1810 HK/1211 HK: EV post holiday sales weak, LI and AITO strong but NIO and Xiaomi down.（/////////）
• 1810 HK: Xiaomi to launch new products on July 19th (/)

• The Nasdaq Composite plunged over 2.7%, its worst decline since December 2022, as tech stocks faced pressure from potential US export curbs on China and Trump’s comments on Taiwan
• A Boston Consulting Group study found that only 16% of Japanese employees and 31% of managers use generative AI at work, the lowest among major countries.
• Hong Kong-based activist acquired a 5.09% stake in FANCL and aims to provide management advice amidst Kirin takeover

• Baidu announced that the company has seen a rapid uptake in its Robotaxi business on the mainland.
• Baidu is at the forefront of the industry globally with its Fully Self Driving taxis available in more than 10 major cities in China.
• Baidu’s autonomous taxi unit, Apollo Go, has over 100 million kilometers of high-level autonomous safety driving mileage and holds over 5,000 autonomous driving patents.

• Discussion about the potential for Chinese companies to use shell corporations to rent GPUs from American companies
• Mention of a blog post by Sequoia and a report from Goldman Sachs on the challenges of monetizing AI infrastructure
• Skepticism about the return on investment in AI due to lack of clear revenue sources and consumer use cases, particularly with companies like Microsoft and Amazon investing billions in AI projects.

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

• The popularity of <DnF Mobile> and <Arena Breakout> continues to rise. As a result, we are increasing the gross billings estimation for these games by 10% and 15% respectively.
• <Need For Speed Mobile> had an impressive first day, topping the iOS download charts and ranking  15th on the grossing chart. We are raising the expected gross billings by 25%.
• Due to the game’s lifecycle, <Eggy Party> has experienced a slight decline in revenue. Therefore, we are adjusting the forecast down by 10%. Conversely, <Identity V> continues to perform strongly.

• The Dow Jones Industrial Average surged over 700 points on Tuesday, setting a new all-time closing high
• Neste and Mitsubishi Corporation are forming a strategic partnership to develop renewable chemicals and plastics
• Fujitsu announced a strategic partnership with Cohere Inc., focusing on developing advanced Japanese language models for enterprises

• New records were set in June with land temperatures 1.75°C above average and ocean temperatures 0.98°C soaring above average.
• The Climate Shift Index (CSI) revealed that 4.97 billion people experienced extreme heat from June 16-24, with a significant increase in heat due to climate change.
• June 2024 saw severe precipitation extremes, with drought conditions in places like the western U.S. and heavy rainfall in regions including southern Japan and Bangladesh.

• Government Implements Uniform 5% Tax for Aircraft and Engine Parts to Boost Domestic MRO Industry
• Telangana Government Announces INR 35,000 Crore Farm Loan Waiver Scheme
• Temasek to Invest $10 Billion in India Over Next Three Years

• In last month’s monetary policy decision, the Reserve Bank of Australia (RBA) kept interest rate unchanged at 4.35%.
• According to a Reuters poll, a majority of the economists predicted interest rates to remain unchanged in the current quarter, followed by a 25bps cut to 4.10% in 4Q24.
• Amid possible rate cut talks both in the domestic as well as the U.S. market, we want to take a look at Australian biotech companies.

• PDD US/BABA US/JD US/VIPS US/3690 HK: NBS publishes social retail consumption data for June 2024 (-/+)
• 1024 HK: Kuaishou Releases First Fully AI-Generated Micro-Drama, Receives Positive Reviews.（+）
• BABA US/PDD US/1519 HK/ZTO US: Weekly parcel volume shows 26% y-o-y growth (+)

• 981 HK/1810 HK: Huawei to launch updated Nova series smartphones (+//)
• BEKE US:China’s residential property prices show narrowing MoM decline in June (+)
• 1810 HK/AAPL US: IDC publishes 2Q24 smartphone sales data (+)

• The Energy Select Sector SPDR Fund (XLE) has underperformed the S&P500 and Russell 2000 indices during 2024 (Fig 1).
• The S&P 500 has gained ~18%, outpacing the ~8% rise in the XLE and the ~6% rise in the Russell 2000.
• The XLE’s 1H24 performance likely reflects oil prices trading in the $75 – $80/bbl band for much of the first six months of 2024 and natural gas prices which were negatively impacted by mild winter weather. 

• Consumption subsidies in China has been muted in the 2020-2024 period, compared to practices in 2009-2012. We believe it reflects different thought of Chinese government at these two times;
• Past data has suggested that consumption subsidies are effective. We expect consumer subsidies of ~RMB 50bn to be issued in C2H24 to revive consumption;
• An even bigger consumer stimulus of ~RMB 200bn might be issued in 2025, and we believe a consumption tax reform might be one the permanent fixes for the purpose.

• National Stock Exchange (NSEIN IN) updated rule on Collateral for Margin Requirement in Intraday & F&) Trading. 
• NSE almost trimmed 1000 Securities acceptable as collateral, leaving only about 730 counters for F&O and intraday traders to pledge for margin trading facility.
• New Rules will be applicable step by step till Nov-24.

• US stocks gained Monday as an attempted assassination on Donald Trump boosted his election chances
• Global smartphone shipments rose 6.5% year-over-year in Q2 2024, marking the fourth consecutive quarter of growth
• Sony aims to transform its gaming IPs into high-quality TV and cinema content, leveraging its skilled personnel and technology

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Morphic Holding, Inc. (MORF) agreed to be acquired by Eli Lilly and Co. (LLY) for $3.2 billion or $57/share in cash, with value primarily driven by lead drug MORF-057, an oral α4β7 integrin inhibitor, in Phase 2s for inflammatory bowel disease (IBD). MORF-057 looks to compete against injectable biologics in the large UC and Crohn’s markets, aiming for similar efficacy, better safety, and oral convenience.
• Morphic’s novel drug shares the same target as Takeda’s Entyvio, a successful anti-α4β7 antibody. MORF was up 75% last Monday.

• Furniture and furnishings stocks were nicely higher in the week, as the market rotated from larger, growth-oriented, and AI-driven stocks to smaller-cap, value-oriented issues.
• The WTR Commercial/Contract Furniture Index (+4.4%), Residential Manufacturers & Suppliers Index (+8.3%), and Home Goods Retailers Index (+8.1%) all had strong showings, reflecting the gains seen in the broader Russell 2000 (+5.4%).
• The Mass Retailers Index fell (-0.4%), in line with the broader moves away from large-cap, technology-oriented stocks. 

• It was a good week for cannabis stocks, with the US cannabis MSOS ETF gaining 6.15% and global YOLO increasing 5.15%.
• The Cannabist (NEO: CBST, OTCQX: CBSTF) +16.67% was the biggest winner among the larger MSOs, while MariMed (CSE: MRMD, OTCQX: MRMD) -10.53% lost the most.
• Politics continue to drive prices and cannabis investors are showing that they prefer a democratic ticket headlined by Vice President Harris rather than President Biden.

• The Dow closed above 40,000 for only the second time, finishing just over two points shy of a record high
• Mitsui & Co will invest 500 billion yen to raise its domestic data center assets to 1 trillion yen by 2030
• SoftBank acquired Bristol-based AI firm Graphcore Ltd, although the financial terms were undisclosed. Graphcore specializes in AI chips to rival Nvidia

• 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 CPI, PPI, imports, and exports data.
• Companies mentioned:Baidu (9888 HK), SAIC Motor (600104 CH), Samsung Electronics (005930 KS)