Thematic (Sector/Industry)

• The S&P 500 and Nasdaq each marked their eighth consecutive day of gains, a first in 2024
• Tokyo Metro is preparing for a late October listing on the Tokyo Stock Exchange, with an expected market capitalization of 640-700 billion yen
• Canadian convenience store giant Alimentation Couche-Tard has made a takeover offer for Seven & I Holdings

• Estee Lauder continues to  underwhelm on its China strategy, making names with less country exposure such as Kose look increasingly attractive
• While the 7&I deal outcome remains highly  uncertain, NKY225 replacement candidates should see a lift in the short-term
• This includes PPIH, which looks oversold after yesterdays negative price reaction to the Founder’s 22 year old son being promoted to a non-exec director.

• There has been a long-term trend of market concentration in Japan’s retail sector for more than a decade.
• But consolidation is accelerating due to the pressures to find growth in a depopulating market and the winner takes all phenomenon which rewards the leading chains.
• With higher growth and greater access to capital for the best retailers, the net result is dramatically higher levels of M&A in sectors like drugstores and even supermarkets.  

• Cabinet Approves INR 33,700 Crore Infrastructure Project, including rail, and new airport
• Adani Power in Negotiations to Acquire Reliance Power’s 600-MW Thermal Plant
• Hero MotoCorp Faces INR 17 Crore Tax Notice from Delhi GST Authorities

• Q1FY25 results of the leading Indian pharmaceutical companies showed healthy and broad-based growth of the Indian pharmaceutical market, which grew 8.7% in Q1FY25.
• Most of the top listed players registered double-digit revenue growth from their respective India formulation segments. Focus on chronic therapies remained major growth driver.
• The Nifty Pharma Index has outperformed the benchmark Nifty 50, rising 32% YTD. The benchmark index has gained just 13% over the same period.

• DRAM revenues amounted to $23.3 billion in Q224, representing increases of 28.3% QoQ and 110.5% YoY.
• In the case of NAND, Q224 revenues amounted to $16.5 billion, representing increases of 17% QoQ and 83% YoY.
• Unprecedented demand for HBM & DDR5, robustly increasing content per box for both PC & Smartphone, looming capacity constraints, more/better LTA coverage are all mounting tailwinds for the memory segment 

• Lots of inquiries and discussions about the semiconductor market this week, stock market movements relatively flat
• Nvidia up 11%, AMD up 7%, Microsoft up 4% last week
• Market experiencing a dialing back of hype, some names still overvalued, but overall growth dynamics in semiconductors still intact

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

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Last week, Medicare posted the first negotiated prices for Part D drugs, an additional 11% discount by our estimate.
• Mpox declared a global emergency, as the SIGA antipox treatment drug failed study, but mpox vaccine makers BVNRY and GOVX got a boost. 

• The US cannabis MSOS ETF ended the week +7.05%, while the global YOLO ETF finished +7.03%.
• The MJUS ETF rebalancing drove considerable volatility in the underlying, with MariMed (CSE: MRMD, OTCQX: MRMD) and TerrAscend (TSX: TSND, OTCQX: TSNDF) both up more than 30% in the last five sessions, while Curaleaf (TSX: CURA, OTCQX: CURLF) and Green Thumb Industries (CSE: GTII, OTCQX: GTBIF) ended in the red.
• The top 10 MSOs (by enterprise value) have reported 2Q earnings. 

• Stocks closed higher on Friday, capping the best week of the year for major indexes.
• In the April-June quarter, 70% of surveyed Japanese companies exceeded profit forecasts
• Japan’s anime and content exports, at 4.7 trillion yen annually, are nearing parity with the semiconductor industry’s 5.7 trillion yen

• This week, the S&P 500 surged 3.9%. The rally was driven by encouraging inflation data, robust retail sales, and lower-than-expected initial jobless claims
• Japanese stocks saw a remarkable recovery this week, with the Nikkei surging over 3,000 points and posting gains for four consecutive trading days.
• Fujikura’s stock surged 40% over the past week due to a positive market outlook driven by the rising demand for AI servers

• Upbeat results briefing from Asahi Intecc on Friday continues to make this look oversold with GPM bottoming, its MTP 1-year ahead of plan and strong growth outlooks for key markets China and US.
• With numbers out for PPIH on Friday and the outlook reassuringly steady, this may start to get more attention as NKY225 inclusion candidate given it comes from the under-represented consumer goods segment.
• AMAT numbers showing a decline in China revenues a red flag for Japanese SPE names overly reliant on China sales?

• Retailing is booming in Japan, backed by consumers getting out and about, buying enthusiastically and enjoying Japan’s shop-focused entertainment centres once again. 
• Tourists are back in record numbers, with 3 million a month entering Japan since March and well over 30 million expected in 2024 overall.
• Inflation remains a concern, but we’re two years into this round of price increases and consumers are becoming resigned to higher prices. FY2024 will be another excellent year.

• From C1Q24 results we concluded that media platforms with large, untapped and preferably contextual traffic tend to benefit the most from Generative AI (GAI). C2Q24 largely trended the same line;
• But Google is experimenting with inserting ads above or below the AI Overview Box. We hold reservation on the result but Baidu can likely copy;
• New growth emerged in AI Agent with API calls on Microsoft Azure, Google, Linked-In and Snap showing accelerated sequential growth. AI agent is likely the next hot spot in GAI.

• Last week in Japan’s retail sector: continued weakness in shopping mall development due to both falling demand from tenants and competition from online.
• Don Quijote operator, Pan Pacific posted strong results, reflecting high demand from both locals looking for value and tourists browsing for fun.
• The retail sector had a record year in FY23, but a big constraint is the labour shortage but, with many fit older Japanese, some employees are now over 80. 

• Japan market is more than just about the Yen carry trade, it is fundamentally sound and attractive valuation wise. It can prosper with a stronger JPY/USD   
• We believe the longer-term story has not changed, the battle for manpower will make Japan companies more productive and invoke the capitalist animal spirit 
• Topix and Nikkei 225 values have mostly recovered from the 4 Aug plunge, but some stocks continues to lag and is a value BUY

• 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 sources

• 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: China industrial production, retail sales, fixed asset investment; India inflation data.
• Companies mentioned:Bharti Airtel (BHARTI IN), Samsung Electronics (005930 KS)

• High frequency data in the US for mortgage loan applications and mortgage loan volume is improving, not suggestive of recession
• Total domestic credit growth in the US is accelerating in recent months, and this can continue given the HFD on mortgages
• Credit metrics can remain a concern, especially in CRE and card lending, despite the improved delta in mortgage lending and total lending

• Swan Energy to Sell Stake in FSRU to Turkey’s Botas for $400 Million
• L&T Realty and Valor Estate Collaborate on INR 8,500 Crore Project in Mumbai’s Bandra West
• Coal India to Face Penalties for Non-Supply of E-Auctioned Coal in Landmark Decision

• Criterium Energy (CEQ CN)C; Target price C$0.35 per share: New drilling expected to start in September – A drilling rig is scheduled to be mobilized to site in August.
• The two-well infill program, targeting a previously undrilled section of the MGH Field, is anticipated to commence in early September with the wells expected to come on production in early November at a forecasted combined rate of 300 bbl/d.
• While this is a bit later than we anticipated, we continue to forecast that Criterium will exit 2024 with ~1,250 boe/d production.

• Tech laggards bought in the US showing many in the market scrambling to catch the upside after the rapid snapback from last weeks drop.
• Server related strength after Cisco numbers may see sentiment for Nidec finally improving with its cooling modules business emerging as an earnings driver.
• Strong numbers for Coherent confirm the positive trends for its optical transceiver business which points to continued upside for AI data center plays

• ATAT US/TCOM US:Daily Traffic Volume growth on highways is flattish YoY During the Summer Travel Season(-/-)
• BEKE US: Decrease in New Short-term Loans to Residents in July, but Increase in New Long-term Loans(+)
• BEKE US:House prices continued to decline in July . (-)

• 700 HK: Based on <DnF Mobile> Developer Nexon’s 2Q24 Financial Report, the Game Generated around RMB 7bn in Revenue During the Quarter (+)
• 700 HK: <League of Legends> to Introduce Another PVE Game Mode (+)
• BILI US: Bilibili’s <Aether Gazer> to Shut Down on November 12 (/)

• Some more minor data points and highlights: KLIC (ball bonders) says that utilization is 75-80%, which is a good read on China despite the negative industrial headwind.
• Allegro Microsystems is definitely scraping the bottom, and while Sanken (its distributor) is still increasing its inventory, I like the setup there.
• Arrow Electronics (Distributor) says things are improving, which is a big counterpoint to everything else.

• The S&P 500 extended its advance into a fifth straight day, the longest winning streak in more than month
• Japan’s ruling Liberal Democratic Party (LDP) is gearing up for a contested leadership election in September as Prime Minister Fumio Kishida announced he will not seek re-election
• Nike’s stock rose nearly 5% in after-hours trading amid speculation of activist involvement

• Gains for Micron on the potential for DDR5 price hikes should help lift 6871 Micronics after yesterdays excessive weakness.
• More cheer for US home builders after Smith Douglas number beat, adding to the upside story for Sumi Forestry and Selkisui House.
• Defence related plays should remain in the spotlight with Kishida replacement candidates Ishiba and Kono both ex-defence ministers.

• Supreme Court ruled that States can levy cesses on mining activities, distinguishing it from Union’s authority over royalty.
• Retrospective tax collection from 2005 could impose 1.5-2 lakh crore on the mining sector, heavily impacting co. like Tata Steel Ltd (TATA IN) and Coal India Ltd (COAL IN).
• The ruling may exacerbate financial pressures on the mining industry, especially in high-tax states like Odisha and Jharkhand.

• Tencent’s <LoLM> shows strong performance after anniversary event, reaching as high as No. 2 on the iOS Grossing Chart with strong player spending sentiment
• NetEase’s <Justice Mobile> grossing rank continues to decline due to the game’s lifecycle, slightly lowering expectations. <Naraka: Bladepoint Mobile> revenue performance is stabilizing, with annual grossing expected around RMB 10bn
• Bilibili’s <FGO> shows a strong revenue trend, currently in the top 20 on the iOS Grossing Chart, slightly raising expectations

• Government Considers Ethanol Price Increase to Meet Blending 20% Targets
• Torrent Pharma is seeking up to $3 billion to buy KKR’s 54% stake in JB Chemicals.
• Cochin Shipyard will deliver a new dredger worth INR 800 crore to DCI by September 2025.

• Stocks surged on Tuesday, with major indices edging closer to record highs as investors reacted positively to a key inflation report
• Starbucks saw a significant 24.5% stock increase after naming Chipotle CEO Brian Niccol as its next leader
• Japan reported a 8% year-on-year increase in July machine tool orders, reaching 124 billion yen. This marks the third consecutive month of growth

• Shanghai Index is trading at cheap levels based on P/E, P/BV, and P/CF, both against its own history and the valuation gap against other major markets.
• Many companies are paying good dividends, the top-10 highest yielding stocks averages at 12.5%. Dividend cover is solid (>1x), and all are big MCAP with decent ADTV (>USD2m).
• Investors have been underweight China for a long time. Even high quality blue chip stocks are trading at single-digit PE and paying dividends >7%.

• ARM +5.7% will help lift 9984 Softbank which is lagging some of the other high-beta plays in Japan giving it plenty of room to rebound further.
• The market is going to like the news that 2501 Sapporo is finally listening to activist investors who have been angling for the firm to divest some of its large R/E holdings.
• 4922 Kose is looking more interesting after it’s failure to rebound looks to have been caused by a negative read from 4911 Shiseido’s poor numbers rather than anything company specific.

• ONGC, Oil India to Price New Gas at 20% Premium over the APM price.
• JSW Steel buys a 66.67% stake in M Res NSW for $120 million.
• Adani Green Energy aims for a 30% CAGR in renewable capacity.

• PDD US/CPNG US/4385 JP/4689 JP/4755 JP: Temu to launch semi-consignment in Japan and South Korea in October (+/-/-/-/-)
• BABA US: Alibaba upgrades it AI generated fashion model tool (+)
• BABA US: Alibaba’s C2C platform Idle Fish to charge commissions in September (+)

• Bunge’s Q2 results disappointed markets, leading to a huge selloff as both EPS and revenue missed analyst estimates.
• Bunge’s agribusiness segment experienced margin compression despite surging volumes resulting in shrinking profits.
• The refined and specialty oils segment faced headwinds from lower selling prices. Milling emerged as a bright spot, driven by cost optimization.

• Consumer Industry Update:Hubei province takes the lead in implementing the home appliance replacement policy (+)
• ATAT US/TCOM US:The year-on-year decline in hotel RevPAR narrowed in the second week of August, showing resilient in hotel demand.(+/+)
• ATAT US/TCOM US: MCT plans to cut the prices of scenic spot tickets, bodes well to tourism demand. (+/+)

• US stocks ended mixed on Monday as investors prepared for a week of key economic data
• SMC reported a 7% decrease in net profit to 48.7 billion yen for April-June 2024. The decline was attributed to weak semiconductor-related investment
• Japanese automakers Honda and Nissan are developing supply chains for recycled plastic to meet potential European regulations requiring 25% recycled plastic in new vehicles by 2031

• Market volatility has skyrocketed amid uncertainty over U.S jobs health, the systemic unwinding of JPY carry trade and the U.S. presidential race. 
• The key takeaway is the cocaine like emotional roller coaster market, VIX spiked and plunged like never before in a week, indicating a bipolar market.    
• Given many investors are holding on to handsome returns YTD, it is normal to be cautious to lock-in their performance bonus, and rotate to income-focused equities and bonds. 

• Watch for a ‘megaquake’ reversal after a big rotation for names deemed to be winners/losers on Friday on heightened expectations for a major Nankai Trough earthquake over the w/e
• Retail related should rebound sharply after a solid 1Q showing from 3099 Isetan Mitsukoshi, with several related names yet to rebound on concerns the stronger yen will curb tourist spending.
• 1911 Sumitomo Forestry business briefing Friday confirms the strength of its US housing business, with it likely to easily exceed its latest MTP.

• Japan market had the most extreme market reaction due to surprise interest rate hike that prompted unwinding of the JPY carry trade.   
• Nikkei 225 and TOPIX are 18% and 16% off its respective peak achieved in July 2024. Right now, they are only 5% and 4% up YTD.   
• This is an unnerving plunge, investors will reduce risk exposure and rotate into dividend yielding stocks. Valuation wise, Japan is cheap trading 1-SD below its mean. 

• CPP and ADB are negotiating a $100 million investment in JBM Ecolife.
• Vedanta plans to allocate $2 billion for dividends in FY25, supported by strong cash flow.
• UltraTech Cement will launch an open offer on September 19 to acquire a 26% stake in India Cements.

• Hong Kong is trading at cheap levels based on P/E, P/BV, and P/CF, both against its own history and the valuation gap against other major markets. 
• Many companies are paying good dividends, the top-10 highest yielding stocks averages at 8.7%. Dividend cover is solid (>1x), and all are big MCAP with decent ADTV (>USD2m). 
• Investors have been underweight China/Hong Kong for a long time. Even high quality blue chip stocks are trading at single-digit PE and paying dividends >6%. 

• Baltic Dry Index (BDI)* settled at around ~1,808.00 points (USD) on July 29th, 2024 versus ~1,881.00 points (USD) on June 10th, 2024, which was the release date of our previous blog.
• The Index has been comfortably trading and with upward tendency within the historic average price range of 1,000 – 2,000 for most of the period starting January 2023 and up until today.
• BDI also surpassed the level of 2,000 in four notable occasions during the fourth quarter 2023, the first quarter 2024, the second quarter of 2024 as well as in July 2024, but all attempts were short-lived.

• 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 import and export growth, and inflation data.
• Companies mentioned:Samsung Electronics (005930 KS), Infosys Ltd (INFO IN), SK Hynix (000660 KS)

• Well that was an ‘interesting’ week to say the least. It could have been a lot worse
• With Topix down 2.2%, it is no surprise that 329 of the Topix 500 stocks ended in negative territory.
• In terms of factors, there was a clear selling in low PB names, but this was probably more a feature of the dumping of low-PB banks