Thematic (Sector/Industry)

• I’m calling a very definitive bottom in Automotive semiconductor stocks. I’ve been mixed on automotive for quite some time, and as recently as April, I was bearish.
• It all started when China decided to dump cheap EVs globally, which made me extremely concerned about Western automotive companies.
• Hell, I’ve been bearish on WOLF since March of 2023 and wrote not one but two notes about how Silicon Carbide looks like it’s in a rough spot.

• News out of Kazakhstan regarding increased mineral extraction tax for uranium mining
• Impact on global uranium supply and term pricing
• Uranium equities in Australia experiencing significant price increase

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• June witnessed heavy selling across major US crops across corn, beans and wheat with wheat taking the biggest hit.
• Grain prices have been bearish on favorable supply. The adage of ‘rain makes grain’ has changed this summer to ‘grain falls like rain’ ahead of WASDE report.
• Positive revisions are expected for major Wheat exporting countries US & Russia, even as EU reels from adverse weather. US grain forecasts will follow suit and outweigh concerns

• Vodafone Idea requests Rs.24,747 crore bank guarantee waiver for spectrum payments from DoT
• Brookfield invests $550 million in Tamil Nadu’s Leap Green Energy for renewable growth
• Adani Ports commits $1.2 billion to Vizhinjam, Kerala’s future container transshipment hub

• PetroTal (PTAL LN/CN)C; Target price of £1.50 per share: Unrestricted cash position increased by >30% during the last quarter – 2Q24 production of 18,290 bbl/d was very near our forecasts of 18.5 mbbl/d but marginally below the company target of ~19 mbbl/d.
• A brief river blockade impacted production but production in June was 20,555 bbl/d.
• All regulatory approvals for the pilot to sell 100 mbbl of production through Ecuador have now been secured.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• Jollibee Foods (JFC PM) dives into Korea’s coffee war zone with a new acquisition. But with expensive funding, selling cheap coffee isn’t so cool anymore.
• Tiger Balm, the beloved pain relief elixir, is under valued in its holding-company, HawPar Corp . In an aging world full of aches, it’s time to let Tiger Balm roar!

• In Real-time market (RTM) Power volumes surged by 20% in June, reflecting the need for immediate power delivery during sudden high-demand periods.
• Indian Govt has extended the blending period of imported coal to Jun-24 to meet the rising demand. 
• Rising Power demand will create a lot more opportunity across value chain including transformers, cables, smart meters etc.

• US stocks fell on Thursday as tech investors reacted to a key inflation report showing a surprising monthly decline in consumer prices
• The yen surged over 2% against the dollar following the US inflation report and speculation of Japanese market intervention
• Fast Retailing, owner of Uniqlo, reported a net profit of 116.9 billion yen ($720 million) for the quarter ending in May, a 37.4% increase

• PDD US/META US: Temu continues to be the most downloaded app in the US (+)
• PDD US : PDD launching new ad-tool to replace previous tools (+)
• 700 HK: Tencent’s Third-Person Shooter Game <Synced> Announces Termination of Service on September 9th (-)

• HFD on US bankruptcy filings suggest more stresses to come from consumer card loans
• US large banks are more exposed to consumer card loans, but small banks have more CRE
• Even where many are seeing far higher charge-offs and impairment costs, HFD suggests these will rise more, and historical peaks, are also far higher

• LKNCY US: Luckin Coffee Opens Its 20,000th Store . (+)
• 1810 HK/NIO US/XPEV US/1211 HK:July holiday saw normal seasonliaty in EV sales, Xiaomi ramp up nicely（///////）
• XPEV US: Details of new refreshed Xpeng sedan P7 revealed (+)

• This note is a weekly 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 sources

• US stocks soared to fresh all-time highs on Wednesday, buoyed by Jerome Powell’s remarks on Capitol Hill
• Uniqlo is focusing on larger flagship stores in Europe to enhance brand visibility and boost sales. Fast Retailing reports today
• Yokohama Rubber is negotiating to acquire Goodyear Tire & Rubber’s off-road tire unit for over $1 billion

• ONGC plans a Rs 2 lakh crore investment for net-zero carbon emissions by 2038, boosting shares
• Jupiter Wagons’ shares dropped 3% following the announcement of a Qualified Institutional Placement
• India’s defence exports surged 32.5% to Rs.21,083 crore in FY24, reflecting robust growth and global reach

• There have been various rumors regarding China’s consumption in general and e-commerce trend in particular. Two of the recent ones are weak 618 sales and keep-it-refunds;
• While we are in general pessimistic on Chinese consumption in the medium term, government subsidies and consumption vouchers are helping to keep consumption, especially e-commerce, going in healthy pace;
• Our TOP PICKS are Alibaba and PDD, both trading at attractive valuations of 7.4x and 9.5x CY24 P/E. Solid June consumption, positive 3Q outlook, and EPS expansion are upcoming catalysts.

• In the vibrant Philippine gaming industry, we found one casino operator particularly poised to capitalize on the growth story.

• With higher growth rates, less competition, and lower taxes than Macau, now may be an opportune moment for value investors looking to cash in on the gaming boom.

• With a strategic focus on expansion, the operator opened another casino this year in Quezon City, which looks set to be a major driver of group revenues over the few years should it follow a similar growth trajectory to the group’s flagship property in Entertainment City.

• We expect e-commerce to have a strong 2H24, allowing the sector to meet or exceed 11% growth expectations 2024 as Amazon’s same-day/one-day initiatives appear to be reviving the secular shift from brick-and-mortar retailers.
• We continue to watch other secular adoption trends, including mobile commerce (m- commerce) and buy now, pay later (BNPL), which should also help drive growth.
• Despite some signs of a slowing economy/consumer, digital advertising should have a solid 2H24 and meet/slightly exceed 9% growth expectations for the year.

• Factors that are accelerating the electricity consumption outlook include: the rise of datacenters and AI (see figure on top right), electrification of everything from vehicles to buildings and oil & gas infrastructure, onshoring and reshoring of industry, more severe weather patterns, and clean hydrogen (electrolysis).
• Growing Backlog of Power Projects There are a significant number of new power generation projects that are coming online and that have been proposed in the US.
• However, growing backlogs suggest that the projects may not be getting approved as fast as developers would like to see (see Figure 5).

• The S&P 500 gained 4.13 points (0.1%) to close at a record 5,576, marking its 36th record close in 2024
• Recruit Holdings will buy back up to 600 billion yen, its largest ever
• Oriental Land, operator of Tokyo Disney Resort, announced plans to enter the cruise business with a project costing about 330 billion yen, set to launch in FY2028.

• SEBI plans to increase F&O contract sizes, limit weekly options, and introduce stricter trading measures.
• Aimed at protecting small investors from risks, these changes may reduce retail participation in derivatives trading.
• SEBI’s initiative emphasizes investor protection, potentially stabilizing the market by reducing speculative trading.

• Gautam Adani to Launch Shipbuilding at Mundra Port Amid Global Demand Surge
• Hyundai Faces Pressure from Tata and Mahindra Ahead of $3.5 Billion India IPO
• Xiaomi plans to double shipments in India, targeting 700 million devices within a decade

• While we were expecting slow but steady growth for China online marketplaces early in 2023, we did underestimate the enduring impact of China property slump on their recovery.
• Sluggish macro environment has come above other factors in driving share performance of China e-commerce stocks, but we see the worst behind us, setting stage for the sector’s up cycle.
• We believe sector valuation will gradually normalize going into 2H24/1H25 due to a combination of continuous improvements in fundamental and risk appetites for China assets.

• For this report we datamined autonomous driving technology (ADT) innovations.
• Worldwide over the last decade the ADT sector has seen nearly 25% CAGR growth in patent filings, with over 40,000 patent family filings.
• Aptiv PLC (APTV US), with a leadership position in several areas of ADT, strong financials, reasonable valuations and strategic partnerships stands out.  

• 3690 HK:Kuaigou Dache (ride hailing) Lowers Commission Rate for Drivers in Tianjin to 10% (-)
• TCOM US:Ctrip Introduces Family Card, Allowing Users to Book Trips for Their Elderly Parents (+)
• 700 HK: <Honor of Kings> to Launch Ranked System Optimization: Points for Wins and Losses (+)

• 300750 SZ: CATL launches new commercial battery brand Tianxing to accelerate truck electrification and defend market share.（/）
• 9992 HK: Pop Mart’s first LABUBU theme store opens in Bangkok with over RMB10 million in sales on the first day(+)
• 1810 HK : Huawei to launch three-hinge/ fold smartphone. (/)

• The S&P 500 and Nasdaq closed at record highs on Monday as investors anticipate key inflation data to gauge the sustainability of this year’s market rally
• Shares of Corning (GLW) surged 12%, after the company raised its quarterly guidance due to strong demand for its optical connectivity products used in AI applications
• Japanese companies, including Sony and Mitsubishi Electric, plan to invest 5 trillion yen in semiconductors by 2029 to boost production of power semiconductors and image sensors

• Hong Kong property sector is undergoing a holistic depression in all sectors including residential, commercial, and retail space.
• The RVD residential property price index has dropped by around 25% peak-to-trough. The commercial and retail space has also witnessed similar retreats in recent years.
• Outflow of citizens, northward spending trend, and exodus of foreign companies each contributes the decline in their respective sectors. It will hurt consumption as the wealth effect hit the economy.

• Vedanta Aluminium Raises USD 250 Mn in Sustainability Linked Loans
• Over 7,000 farmer producer organizations joined ONDC, improving market access and sales
• Ather Energy Plans to Go Global in the Next 12-15 Months

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Eli Lilly and Company (LLY) received FDA approval for donanemab (Kisunla) in early Alzheimer’s, which was largely expected following unanimous support from the June AdComm and multiple delays.
• The cost of Kisunla is $32K/year, which is at a premium to Leqembi (Biogen, Inc. [BIIB]/Eisai Co., Ltd. [ESAIY]) at $26.5K/year, but total cost per patient should be lower for Kisunla, as treatment can be stopped with amyloid clearance.

• In a holiday-shortened trading week (US Independence Day fell on a Thursday), larger-cap stocks outperformed smaller-cap stocks and the Water Tower Research Furniture/Furnishings indexes trailed the market.
• For the week, the WTR Commercial/Contract Furniture Index (-1.2%), Residential Manufacturers & Suppliers Index (-1.1%), and Home Goods Retailers Index (-3.1%) trailed the Mass Retailers Index (+2.2%) and the broader market indexes (-1.0% to +2.0%).
• The US Federal Trade Commission (FTC) is officially seeking to prevent Tempur Sealy from acquiring Mattress Firm, citing concerns over corporate power and potential anti-competitive outcomes. 

• US stocks surged to all-time highs on Friday, buoyed by the June jobs report which may prompt the Federal Reserve to consider a rate cut.
• Japan’s Government Pension Investment Fund (GPIF) reported record gains of ¥45.4 trillion ($282 billion) for the fiscal year ending March
• Honda and Sony will use a shared platform for their electric vehicles (EVs) to cut development costs

• Since Microsoft’s association with ChatGPT has become common knowledge, it’s share price has doubled
• Since rumours of an impending partnership with OpenAI first emerged, Apple share price is up 37% 
• The extraordinary valuations of Microsoft & Apple were driven by association with ChatGPT. Revenue growth to justify those valuations must now depend on ChatGPT. Let’s see how that works out.  

• 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 data, South Korean inflation and GDP growth expectations.
• Companies mentioned:PDD Holdings (PDD US), Alibaba Group Holding (9988 HK), Samsung Electronics (005930 KS), Reliance Industries (RIL IN)

• US Markets: Economic indicators showed signs of slowing, with the ISM Services index contracting and lower-than-expected job growth, hinting at cooling inflation and potential Fed rate cuts.
• Japan’s Market: TOPIX and Nikkei surged, buoyed by expectations of positive retail earnings and strong performance in the broader market.
• Key Stock Moves: Mercari and MHI saw significant gains due to strategic shifts and favorable sector outlooks, while Ain Holdings fell on acquisition concerns.

• Reliance Retail Ventures will launch Shein in India, four years after its ban
• Indian Railways plans 10,000 non-AC coaches by 2025-26 to alleviate overcrowding issues
• The coal sector achieved a notable 10.2% growth in May, leading key infrastructure industries

• Monthly high frequency data from Taiwan’s banks shows strong profit acceleration through May YTD, which will include insurance investment gains for some
• This can be driven by accelerating loan growth to technology companies, to related companies, indirectly and may explain in part, Taiwan’s leading loan growth rate vs other countries
• Credit metrics and net profit growth can be supported for Taiwan’s banks by a sector focus that differs from many others in the region and the world

• One year after we started tracking solar investment in US, the planned capacity almost doubled to 123GW, comparing to addition of 32GW of capacity added in 2023;
• However, there is a lack of wafer, ingot and polysilicon capacity in planning. Only 7GW of ingot capacity is planned, vs. cell capacity rose from 8% of total to 43%;
• Chinese participation declined only slightly from 31% to 28%. Lack of wafer, ingot and polysilicon integration means cost of US production stays high. But overcapacity still restrains up stream profitability.

• Panoro Energy (PEN NO)C; Target price of NOK52 per share: About to commence drilling in EG – The drilling rig has arrived in EG.
• The drilling campaign is about to commence.
• It will include two development wells plus an exploration well at the high impact Akeng Deep prospect.

• Beijing launched the use of medical social insurance (MSI) via online payments, marking MSI payable among all the 1st tier cities in China. But the policy only covers non-prescription;
• However, the progress for the online penetration of MSI payment was still slow, reaching only 3.6% of all MSI capable pharmacies and 0.8% of all pharmacies in China;
• The reason for the slow adoption is the vested, interlinked interests among local public hospitals, local MSI administrators and public security concerns over drug disbursement.

• European stocks climbed amid key election developments and rising optimism about potential US interest-rate cuts
• Foreign investors drove Japanese stock market gains last week, capitalizing on a weakened yen and global interest in AI-related firms
• In the first half of 2024, domestic sales of electric vehicles in Japan plummeted by 39%

• ONDC to Integrate Banks and Fintechs to Expand Credit Services
• SEBI Reduces Corporate Bond Face Value to Boost Retail Participation
• Vedanta’s Q1 FY25 sees mixed results; aluminium and iron ore output rise

• 1211 HK/LI US /1810 HK/NIO US/XPEV US: In the 26th week of 2024 (6/24-6/30), new energy vehicles strengthened across the board, mainly due to consumption subsidies（/////////）
• MNSO US: Indonesia Plans to Impose 100%-200% Tariffs on Chinese Imports (-)
• Macro News Update: Expectations Rise for Consumption Tax Reform (+)

• The policy easing and the change in the base effect started to show some impact on new home sales y/y metrics turning ‘”less negative”.
• We highlight points from our Weekly New Home Sales Data Update Report, which looks at 16 major cities and the latest data for the week ending June 30.
• Certain weekly metrics on a small sample of cities serve as a good gauge for what to expect directionally in the national NBS data released later.

• BABA US/JD US/3690 HK: Taobao adds one-hour delivery entrance to app homepage (+/-/-)
• BABA US: Alibaba upgrades enterprise-chat application “DingTalk” into an AI super-app (+)
• TCOM US :The average ticket price for domestic routes during the summer vacation period decreased by 12%, with a narrowing decline (+)