Thematic (Sector/Industry)

OVERSEAS: Stocks weaker ahead of Friday Non-farm payroll data; yields ease slightly; UK’s Metro Bank stock -30%
JAPAN: Nikkei futures point to flat opening; Kyowa Kirin to acquire UK biotech company; Honda N-Box best selling car in Japan
JapanX – Reality starting to sink in as airlines worry about the costs of sustainability

China Property Developers In Distress – Weekly News & Announcements Tracker | 29 Sep – 5 Oct, 2023

By Robert Ciemniak

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

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Oct 05

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks Recover; Hitachi Zosen’s Cheap Cuts of Lab-Grown Meat and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | Stocks Recover; Hitachi Zosen’s Cheap Cuts of Lab-Grown Meat
Indian Life Insurance (And Savings) Sector Primer – Long-Term Potential and Strong Operating Margins
Australia – New Insolvencies Data: Construction Appointments at 829 Vs 588 YoY | Credit Risk Worsens
Mat-Chem Notes For the Week Ended September 29, 2023

Ohayo Japan | Stocks Recover; Hitachi Zosen’s Cheap Cuts of Lab-Grown Meat

OVERSEAS: SPX +0.8% as stocks recover from recent steep losses; ADP data hints at slower pace of job growth; bond yields eased off
JAPAN: Nikkei Futures (+0.5% v cash) point to stronger open, JPY 149/$. Toyota signs long-term battery deal with LG Energy; Docomo takes stake in Monex.
JapanX: Hitachi Zosen slashes lab-grown meat protein cost by 90%

Indian Life Insurance (And Savings) Sector Primer – Long-Term Potential and Strong Operating Margins

By Raj Saya, CA, CFA

Indian Life Insurance Sector is a play on lucrative Indian demographics, under-penetration of life insurance and retirement savings across cohorts of the population.
The large firmsSBI Life, HDFC Life , LIC IN , ICICI Pru, MAXF IN are ripe for long-term secular growth for decades to come as they dominate the market.
This “Primer” sets the stage for the company-specific notes to follow. Here we discuss the sector level issues, key metrics and relative valuations. See attached PDF- Free access.

Australia – New Insolvencies Data: Construction Appointments at 829 Vs 588 YoY | Credit Risk Worsens

Australia Securities & Investment Commission produces high-frequency data on insolvencies, which is valuable data for analyzing banks. There is pronounced deterioration in at least 3 sectors.
In construction, total appointments rose to 829 YTD to 10 Sept 2023 from 588 a year ago and from 250 in the preceding comparable period.
Hotel & food services and retail trade are also seeing high growth of insolvencies. Australia’s banks will likely face more defaults, NPLs and credit costs.

Mat-Chem Notes For the Week Ended September 29, 2023

WTR-CMI last week. The third quarter ended on a down note, with the S&P 500 losing 3.7% and the Russell 2000 dropping 2.7%.
Our WTR-CMI index slightly underperformed the Russell 2000, declining 3.0% for the week. Coincidently, RYAM led the performance of stocks in our index, appreciating 18% last week, as news spread of one of its main competitors in commodity markets announcing the intention to shut down a major wood pulp production plant in the US
Lithium (LAC and PLL) and ag- chem stocks (FMC and AVD) were the worst performers in our index last week on lower lithium prices and signs of slowing EV demand, and a weaker farmer outlook for 2024/25 season.

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Oct 04

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Turmoil in Washington and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | Turmoil in Washington, Stocks & JPY; Japan Rail Lifting Tourist Pass Prices
Singapore – New Monthly B/S: Trade Finance Loans -24% YoY, Fixed Deposits +37% YoY at 50% of Total

Ohayo Japan | Turmoil in Washington, Stocks & JPY; Japan Rail Lifting Tourist Pass Prices

OVERSEAS: US stocks sink, bond yields surge on hot jobs data. SPX dropped -1.4%
JAPAN: NKY futures continue to decline -1.6% vs cash. JPY volatility as hits 150/$. Weak September sales at Uniqlo; strong US sales for Toyota
JAPAN X – JR companies raising prices for tourist passes another sign that bosses keen to protect ROE

Singapore – New Monthly B/S: Trade Finance Loans -24% YoY, Fixed Deposits +37% YoY at 50% of Total

New monthly balance sheet is out for Singapore banks, so we have a window on 3Q23 with data through 1 August. Total loans -6.0% YoY worse than -5.5% preceding month.
Trade finance loans are moving well lower. Growth rate is -24% YoY in latest month with negative double digit growth YoY since January.
Fixed deposits are surging, latest month +37% YoY and these higher cost monies are now 50% of total deposits, compared with 37% of total one year ago.

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Oct 03

Daily Brief Thematic (Sector/Industry): Ohayo Japan: US Big Tech Higher; Shipping Giants Join Hydrogen Supply Chain and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan: US Big Tech Higher; Shipping Giants Join Hydrogen Supply Chain
Mattress Imports – July Imports Drop Sharply; ITC Preliminary Finding Favors US Petitioners

Ohayo Japan: US Big Tech Higher; Shipping Giants Join Hydrogen Supply Chain

OVERSEAS: Dow Jones falls 0.2%, Yields surge ahead of Friday Jobs report, Nvidia up almost 3%
JAPAN: Nikkei futures -0.5% vs cash. Tankan (business sentiment) improved in the third quarter, particularly among big non-manufacturers, reaching levels not seen since 1991
JAPAN X: Three Japanese Shipping Giants join Hydrogen Supply Chain. Japan is well on its way to achieving its hydrogen targets

Mattress Imports – July Imports Drop Sharply; ITC Preliminary Finding Favors US Petitioners

Somewhat belatedly, we update our continuing analyses on US mattress imports, with the July 2023 mattress import data as posted on the Department of Commerce, US International Trade Commission Data Web.
Importantly, we also discuss and comment on the progress of the July 2023 anti-dumping duty (AD) / countervailing duty (CVD) petition and the preliminary investigations by the USITC.
Following an August 18 conference, the USITC issued a Preliminary Findings and Staff Report that found “a reasonable indication that an industry in the United States is materially injured by reason of imports of mattresses” from 12 countries listed under New AD12 at the right.

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Oct 02

Daily Brief Thematic (Sector/Industry): Ohayo Japan: Saying Goodbye to September’s Challenges; JapanX: EV Charging Infra Is OK and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan: Saying Goodbye to September’s Challenges; JapanX: EV Charging Infra Is OK

Ohayo Japan: Saying Goodbye to September’s Challenges; JapanX: EV Charging Infra Is OK

OVERSEAS: The S&P 500 had a challenging September, closing down 5% for the month, marking its worst monthly performance since December 2022
JAPAN: Euglena shifts focus to commercial biofuels, Welcia partners with AEON for increased food sales, and Hitachi Zosen revolutionizes artificial meat with a 90% cost reduction in synthetic protein
JAPAN X: Growth in EV sales can only be sustained if charging demand is met by accessible and affordable infrastructure

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Oct 01

Daily Brief Thematic (Sector/Industry): Japan Weekly | Stocks Slump and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Japan Weekly | Stocks Slump, Oracle Outperforms, Activists Accumulate
China Banks: Depressed Positioning
US Big Banks – Wkly B/S 20 Sep, Slower Loans +1.5%, CRE -0.5%, Big Term-Deposits Up to 6.8% of Total

Japan Weekly | Stocks Slump, Oracle Outperforms, Activists Accumulate

Japanese stocks limped towards the end of the quarter, with Topix ending the week -2.2% lower. Bond yields hit 10 year high and yen ended play at Y149/$
Economic momentum may be slowing and tech stocks plumbing new lows, but Oracle Japan surprised the market with 12% top line growth in the first quarter.
Yet more foreign / activist buying in the drug store sector. Consolidation is the story and Orbis want to write the ending.

China Banks: Depressed Positioning

By Steven Holden

Fund exposure to China & HK Banks closes in on lowest levels on record
Asia Ex-Japan investors prefer Indian and Indonesian Banks, whilst Tech/Internet industry groups dominate portfolios.
China & HK Banks stand as the largest industry underweight, with 87% of funds positioned below the benchmark. Underperformance is expected.

US Big Banks – Wkly B/S 20 Sep, Slower Loans +1.5%, CRE -0.5%, Big Term-Deposits Up to 6.8% of Total

Weekly balance sheets to 20 September show worsening general trends for large US banks, that can point to risk aversion, and worse net interest income and profit delta.
Loan growth ratcheted well lower from 2.04% YoY three weeks ago, to 1.89% two weeks ago and now to 1.54% in most recent week’s data. CRE loans see worsening contraction.
Large US banks continue to accelerating growth in Jumbo Time Deposits, now at 89.0% YoY vs 85.8% in preceding week. These are now 6.8% of deposits, 2.1% higher WoW.

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Sep 30

Daily Brief Thematic (Sector/Industry): Homebuilder Sentiment Is Fun for MACRO Tourists and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Homebuilder Sentiment Is Fun for MACRO Tourists, Not for Predicting Returns

Homebuilder Sentiment Is Fun for MACRO Tourists, Not for Predicting Returns

By Jeroen Blokland

First and foremost, we are not positive about US homebuilders due to the sharp decline in housing market activity caused by the significantly increased mortgage rates.
The correlation between the future performance of the S&P 500 Homebuilding Index relative to the broad S&P 500 Index and the level of the NAHB Market Index is ZERO.
In addition, there is no correlation between the performance of US homebuilders and CHANGES in the NAHB Market Index.

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Sep 29

Daily Brief Thematic (Sector/Industry): Ohayo Japan: Stocks & SOX Higher; JapanX – Delayed UK Climate Plans Threaten Heat Pump Adoption and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan: Stocks & SOX Higher; JapanX – Delayed UK Climate Plans Threaten Heat Pump Adoption
Australia Banks – New Data Suggests Weaker Profit, Primarily from Loan Volume & Credit Costs
China Property Developers In Distress – Weekly News & Announcements Tracker | 22-28 September 2023
Restaurant & Retail Roundup – Interview with Build-A-Bear Workshop (BBW)

Ohayo Japan: Stocks & SOX Higher; JapanX – Delayed UK Climate Plans Threaten Heat Pump Adoption

OVERSEAS: US stocks +0.6% – its all macro at the moment – higher interest rates, oil price volatility; US 30y mortgage rates now at 7.3%; Nike earnings beat
JAPAN: NKY Futures +0.4% vs cash. Toyota Aug production +4%; EPCOs to lower residential electricity prices; Sony’s Game unit gets new interim boss.
JAPAN X: Daikin’s concerns about the UK Government backtracking on its climate pledge highlight our concerns over heat pump adoption

Australia Banks – New Data Suggests Weaker Profit, Primarily from Loan Volume & Credit Costs

Newly released data in Australia suggests worsening earnings for banks in the coming 1-2 quarters at least, from both less credit volume and higher credit costs.
Retail sales figures are just out with the YoY change continuing to grind lower, now at only 1.45% with implications for credit card transactions and consumer underlying strength.
General Business Situation survey for next 6 months is now lower than its trough in year 2020. New median house price data shows negative growth for 3 consecutive quarters.

China Property Developers In Distress – Weekly News & Announcements Tracker | 22-28 September 2023

By Robert Ciemniak

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

Restaurant & Retail Roundup – Interview with Build-A-Bear Workshop (BBW)

Monthly report on restaurant and retail companies. At Water Tower Research, we are introducing a new monthly report to focus exclusively on the Restaurant and Retail Industries.
Our report will focus on stock performance, short interest, an outlook for restaurant commodity costs, interesting themes, and company interviews.
In this note, we interviewed Gary Schnierow, Vice-President of Investor Relations, and Corporate Finance for Build-A-Bear Workshop, Inc. (NASDAQ: BBW).

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Sep 28

Daily Brief Thematic (Sector/Industry): Ohayo Japan: US Stocks Mixed; JapanX – Steelmakers Forging a Better Future and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan: US Stocks Mixed; JapanX – Steelmakers Forging a Better Future

Ohayo Japan: US Stocks Mixed; JapanX – Steelmakers Forging a Better Future

OVERSEAS: SPX flat, Dow -0.2%. Energy stocks best performers on higher oil prices. Micron down after results
JAPAN: NKY futures -0.9% vs cash. JPY 149.7/$; Mitsubishi Motors to quit production in China;
JAPAN X: With steel making accounting for almost half of Japan’s industrial CO2 emissions, both government and corporates are moving in the right direction

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Sep 27

Daily Brief Thematic (Sector/Industry): Ohayo Japan: US Stocks Slide; Japan X: Gender Diversity and Overboarding A Dual Challenge and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan: US Stocks Slide; Japan X: Gender Diversity and Overboarding A Dual Challenge
Japan Banks – Accelerating Domestic Credit | JGB Yields Higher | Provisions -79% QoQ & -58% YoY
Around China Housing In 80 Seconds – Visualizing The 2012-2023 Monthly Data
US Banks – Snapshots Ahead of 3Q23 Results
Weekly Sustainable Investing Surveyor – Week Ended September 22, 2023

Ohayo Japan: US Stocks Slide; Japan X: Gender Diversity and Overboarding A Dual Challenge

OVERSEAS: SPX -1.5%; weak consumer confidence; weak new home sales; and Dimon warning of 7% rates
JAPAN: NKY futs -1.3% vs cash; JPY 149.1/$. Kao to sell-off brands on cosmetics slump
JAPAN X: The issue of overboarding in Japan is becoming a big problem, more so given needs to diversify the board

Japan Banks – Accelerating Domestic Credit | JGB Yields Higher | Provisions -79% QoQ & -58% YoY

What’s new is that Japan’s domestic credit growth is accelerating, and it’s now better than in Singapore, for instance; accelerating to 2.51% YoY in July from 0.77% February low
Loan growth and higher JGB yields, both matter for net interest income, and margins. Two year JGB yields are 0.035% on 22 September compared with -0.075% on 30 June.
Profit delta can rise further for Japan’s banks due to better NPLs, with the largest banks’ credit costs/loans moving to 5bps in 1Q24, vs 21bps in 4Q22, 11bps in 1Q23

Around China Housing In 80 Seconds – Visualizing The 2012-2023 Monthly Data

By Robert Ciemniak

Through a set of 4 quick animations of city-level data (70 cities), we illuminate the dynamics of new home prices in China over the past 12 years
This helps put the current (since mid-2021) downturn in context and build intuition about the components of the aggregate declines, including the by-city-tier breakdown
We point out a number of key data caveats and traps in the interpretation of the data sets

US Banks – Snapshots Ahead of 3Q23 Results

By Victor Galliano

We focus in on three key issues – unrealized losses on bond holdings, commercial real estate exposure and deposit movements – ahead of US banks’ release of 3Q23 results
Current US Treasury yields imply further erosion of US banks’ adjusted CET1 ratios; we estimate that accumulated unrealized securities losses accounted for 25% of system total equity to June 2023
Bank system deposits are declining, but not alarmingly; CRE exposure is a key potential credit risk for the US banks; we like Capital One and we are cautious on Zions

Weekly Sustainable Investing Surveyor – Week Ended September 22, 2023