Thematic (Sector/Industry)

August rush…the good. After a very quiet July, August has been buzzing with deal activity.
August has brought 19 new SPAC merger deal announcements.
This is the highest monthly total of the year, and we may not be done yet with one more week of the month left.

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Aug 25

Daily Brief Thematic (Sector/Industry): BEA & Dah Sing – Rampant Deterioration in HK Credit Metrics and more

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

In today’s briefing:

BEA & Dah Sing – Rampant Deterioration in HK Credit Metrics, Not Totally Visible in Headline Results
US Banks – Qtly Profit Falls As % Of FY23 Consensus, Some More Than Others: USB, PB, COL, WAL, AEX
Rich Men North of Richmond, Return of Mask Mandates, and New COVID Variants
Ohayo Japan| Tech Sold as Yields Take Their Toll; JAPAN X: Tradition Ends-Japan Embraces Job Hopping
The Stocks to Own in Thailand – Vol. 42
China TMT Update-BGNE/300274CH/300750CH/1211HK/JD/2618.HK-JD Lowering the Threshold to Free Shipping

BEA & Dah Sing – Rampant Deterioration in HK Credit Metrics, Not Totally Visible in Headline Results

By Daniel Tabbush

Notes to financial statements show rampant deterioration in credit metrics for both banks
BEA’s write-offs in property development impaired loans rise by 4.1x in 1H23 vs FY22
Overdue loans by >1yr rose 277% HoH in 1H23 at Dah Sing, but it cut credit costs 48%

US Banks – Qtly Profit Falls As % Of FY23 Consensus, Some More Than Others: USB, PB, COL, WAL, AEX

By Daniel Tabbush

1Q23 earnings were 130% of consensus annualized, 2Q23 is 104% consensus annualized
USB saw its quarterly income/FY23 consensus move from 27% to 21% from 1Q23 to 2Q23
COLB, WAL are at lowest FY23 consensus achievement rates: 21% and 41% during 1H23

Rich Men North of Richmond, Return of Mask Mandates, and New COVID Variants

By Douglas Kim

In this insight, I discuss how the song Rich Men North of Richmond, return of mask mandates, and new COVID variant are all intertwined.
“Rich Men North of Richmond” is a song about the excessive control of the government and the pressures of life.
I discuss the intricacies of how these three stories are intertwined and how the certain sectors of the stock market could be impacted from the potential changes in government policies.

Ohayo Japan| Tech Sold as Yields Take Their Toll; JAPAN X: Tradition Ends-Japan Embraces Job Hopping

OVERSEAS. Higher Yields and Lower Equities as Major US Indices were lower; Focus on Jackson Hole Speech from Powell; Fed Collins Hints at hikes; Boeing Supply Issues.
JAPAN. NKY Futures -1.9% vs Cash; USDJPY 145.8; Fukushima Water Release prompts China Backlash; Gasoline reachs 15 year high – govt considers subsidies; Boon from Yen for Japan Majors.
JAPAN X: Farewell to lifetime employment ? Japan’s workers are embracing job hopping. This is driving higher wages as labor get reallocated to higher value added roles.

The Stocks to Own in Thailand – Vol. 42

By Dr. Andrew Stotz, CFA

We highlight 14 stocks in Thailand that look interesting to us based on our FVMR Methodology
Portfolio changes: Seven stocks remain, seven new join the fray
Since inception, it has gained 122% versus the SET 100 Index’s return of 35%

China TMT Update-BGNE/300274CH/300750CH/1211HK/JD/2618.HK-JD Lowering the Threshold to Free Shipping

BGNE: Roche announced positive result for its TIGIT treating NSCLC, overturning negative result for treating EC-SCLC (/)
300274CH/300750CH/1211HK: Customs data shows Chinese exports of key renewable energy items decelerated
JD/2618.HK: Estimates for the cost of JD lowering the threshold to receive free shipping (-/+)

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Aug 24

Daily Brief Thematic (Sector/Industry): Japanese Still Saving: ¥19 Million in Average Liquid Savings and more

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

In today’s briefing:

Japanese Still Saving: ¥19 Million in Average Liquid Savings
US Banks – HFD Mtg Vol Near 1990 Level, Net Int Inc Delta Can Be Negative & With Surging Provisions
South Korean Gaming: An Overview Post Covid May Contain Catalysts Investors Have Overlooked
Ohayo Japan|NVIDIA Crushes Street #s – Stock Surges; JAPAN X: JFE Adopts “Green Steel”
[Blue Lotus Sector Update]: Is There a Good Capacity War from China?
China TMT Update-PDD/ATAT/XPEV/NIO/LI-Temu Increases Prices/Hotel RevPAR Declines/G9 Facelift

Japanese Still Saving: ¥19 Million in Average Liquid Savings

By Michael Causton

Japanese households were already saving at some of the highest rates on record before the pandemic due to government insistence that inflation was just around the corner.
The pandemic only exacerbated worries over financial security leading to further squirrelling away of funds, eliminating any benefit from higher wages on consumption.
As a result, consumer savings have hit new records, averaging ¥19 million in liquid assets per household and much higher for older households.

US Banks – HFD Mtg Vol Near 1990 Level, Net Int Inc Delta Can Be Negative & With Surging Provisions

By Daniel Tabbush

High-Frequency data for US mortgage loan applications, lending and LLR are a red flag
US large banks’ loan growth is decelerating sharply, and LLR rising fast for many weeks
Banks face low or negative net interest income growth, as credit costs rise substantially

South Korean Gaming: An Overview Post Covid May Contain Catalysts Investors Have Overlooked

By Howard J Klein

Investor focus post covid has been on Macau and Philippine recovery.
Basic economics and demographics of South Korea favor a bullish cycle ahead post covid.
Kangwon Land Co. holds a revenue lead against all competitors due to its status as the only property in the country permitting locals to gamble.

Ohayo Japan|NVIDIA Crushes Street #s – Stock Surges; JAPAN X: JFE Adopts “Green Steel”

OVERSEAS. NVIDIA Surges after hours on Beat, Buyback; US Yields Fall after weak PMI; China Braces for Trust Defaults; India lands on the Moon; RUSSIA: Prigozhin off the board
JAPAN. NKY Futures +0.6% vs Cash; USDJPY 144.8; Japan to allow broader defense exports; Kishida quandry: Spend more amid rising Debt Costs; Japan Govt Budget: 60bn Yen for AI
Japan X. JFE Steel Adopts “Green Steel” for Low CO2 Emissions in Cargo Ship Construction . This is just the start of a trend we expect to accelerate.

[Blue Lotus Sector Update]: Is There a Good Capacity War from China?

C1H23 solar PV and wind power capacity addition grew 154% and 72% YoY in China, significantly above 2022 growth. With the real estate fallout, renewable capex will likely stay robust.
We view hydrogen being constrained by its end use in the near future. Incremental renewable capex will still go to solar and wind;
Capacity addition is a long-term problem. But we don’t think overcapacity is an issue now. Capacity investment in upgrading technology is a plus. The more should be the better.

China TMT Update-PDD/ATAT/XPEV/NIO/LI-Temu Increases Prices/Hotel RevPAR Declines/G9 Facelift

PDD: Temu reportedly increases product prices in certain regions (+)
Atour Lifestyle: Summar vacation season is coming to a end, hotel RevPAR begin to decline
XPEV/NIO/LI: Xpeng to launch G9 facelift in September ( +/-/-)

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Aug 23

Daily Brief Thematic (Sector/Industry): Ohayo Japan|US Stocks Fall on Consumer Fears; JAPAN X: Hitachi Inspires with Mgmt Incentive Scheme and more

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

In today’s briefing:

Ohayo Japan|US Stocks Fall on Consumer Fears; JAPAN X: Hitachi Inspires with Mgmt Incentive Scheme
The Japanese Consumer: Spending Again

Ohayo Japan|US Stocks Fall on Consumer Fears; JAPAN X: Hitachi Inspires with Mgmt Incentive Scheme

OVERSEAS. US Stocks fall as Dicks Sporting and Macy’s raises concerns over US consumer; US Tells China to be more Transparent on Economy; Traders Betting on Blow Out NVIDIA
JAPAN: NKY Futures -0.3% vs Cash; USDJPY 145.9; Japan Defense Ministry to ask for (another) Record Budget; 2 trillion yen request for GX spend in FY24.
JAPAN X: Hitachi Introduces Innovative Executive Compensation Plan Tied to Stock Performance Against Competitors. Interesting structure-lights a fire under senior management.

The Japanese Consumer: Spending Again

By Michael Causton

The following is an analysis of the latest census data to provide investors in Japanese retail and consumer stocks with background on key consumer behaviour trends.
Record levels of income, full to bursting savings accounts averaging ¥19 million, and signs of a falling propensity to save, mean people are spending again.
The only dark cloud is that rising prices remain a concern for many households, restraining spending on disposable items in many low income households.

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Aug 22

Daily Brief Thematic (Sector/Industry): Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive’s Aerial Ambitions and more

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

In today’s briefing:

Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive’s Aerial Ambitions
China A-Shares: Construction Materials Slump
China TMT Update-Luckin/CATL/LI/700.HK:HoK Crisis;Coffee Price War Continue; Shenxing Battery
Cannabis – Cannabis News for the Week Ending August 18, 2023
Consumer Hardlines: Mattress Imports
Weekly Sustainable Investing Surveyor – Week Ended August 18, 2023

Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive’s Aerial Ambitions

OVERSEAS. US Yields spike to hit 16 year high; Stocks rise SPX closed +0.7% with Tech leading; China woes continue as forecasts cut; NVDIA and TSLA rebound on street optimism
JAPAN. NKY Futures +0.7% vs Cash; USDJPY 146.2; BOJ on pace to buy record amt of bonds under new YCC regime; Foreigners unloading JGBs; Japan DX market > 2trn yen
Japan X. Flying Cars – investments pouring into the space globally. Skydrive, Japan’s Flying Car beacon bearer, partners with Suzuki to to push the boundries in the space.

China A-Shares: Construction Materials Slump

By Steven Holden

Concerns over Chinese Real Estate sector pushes ownership in Construction Materials stocks to their lowest levels on record.
Fund activity heavily skewed to the sell-side and driven by mass closures in Anhui Conch Cement, Huaxin Cement and Beijing New Building Materials.
Investor sentiment, as measured by A-Share fund activity and positioning, is as low as it gets for the Construction Materials sector.

China TMT Update-Luckin/CATL/LI/700.HK:HoK Crisis;Coffee Price War Continue; Shenxing Battery

Luckin Coffee: Price war continue and competition in low tier cities expansion intensified
CATL/ LI: CATL unveils Shenxing Battery ( + / +)
700.HK: Honor of Kings Faces Reputation Crisis Recently( – )

Cannabis – Cannabis News for the Week Ending August 18, 2023

Revenue of $129.2 million was +3.8% Q/Q, -0.3% Y/Y, and above consensus of $125.0 million.
Adjusted gross margins of 40.4% improved 2.1% Q/Q, declined 2.20% Y/Y, and exceeded estimates of 39.0%.
Expanding East Coast markets drove revenue growth and higher quarterly margins, and were partially offset by price compression in Florida, Illinois, and Massachusetts.

Consumer Hardlines: Mattress Imports

Under Statistics, we update data for June 2023 versus June 2022 (Y/Y comp) and May 2023 (M/M comp).
Each table’s lower half provides similar data for the 12 countries targeted by the new AD petition.
In June, total imported units fell ~9% Y/Y but rose ~11% M/M.

Weekly Sustainable Investing Surveyor – Week Ended August 18, 2023

The WTR Sustainable Index underperformed the broader market, falling 4.8% W/W versus the S&P 500 Index (down 2.1%), the Russell 2000 Index (down 3.4%), and the Nasdaq Index (down 2.2%).
Energy Technology (14.7% of the index) contributed to the index’s underperformance, falling 7.3%, while Industrial Climate and Ag Technology (46.6% of the index) was down 2.1%, ClimateTech Mining was down 7.8%, and Advanced Transportation Solutions was down 6.8%.
Top 10 Performers: LYTS, EOSE, PE, RIDE, PGTK, BWEN, ORGN, SOLO, TGEN, ADSE

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Aug 21

Daily Brief Thematic (Sector/Industry): Ohayo Japan| Pause at End of Brutal Week; JAPAN X: AI-Powered Efficiency: Toyota’s Design Revolution and more

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

In today’s briefing:

Ohayo Japan| Pause at End of Brutal Week; JAPAN X: AI-Powered Efficiency: Toyota’s Design Revolution

Ohayo Japan| Pause at End of Brutal Week; JAPAN X: AI-Powered Efficiency: Toyota’s Design Revolution

OVERSEAS. SPX largely unchanged after three days of Equity derisking; Higher US Rates continue to pose a concern; China Property Turmoil Prompts Govt Intervention
JAPAN. NKY Futures +0.1% vs Cash; USDJPY 145.4; Japan’s July CPI slows to 3.1%; Govt considering tax break for Cos that lift wages; INCJ to cut Renesas stake to <10%
JAPAN X. Efficiency and Innovation in Vehicle Design: Toyota’s New Generative AI Approach. We like this development at Toyota and see multiple long-tailed benefits.

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Aug 20

Daily Brief Thematic (Sector/Industry): Semiconductor WFE. China Spending Spree Offsets Memory & Logic Declines and more

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

In today’s briefing:

Semiconductor WFE. China Spending Spree Offsets Memory & Logic Declines

Semiconductor WFE. China Spending Spree Offsets Memory & Logic Declines

By William Keating

Q2’23 revenues for the top 5 WFE players amounted to ~$22 billion down ~10% QoQ and essentially flat YoY.
While WFE spending as a whole will decline 20% YoY, ASML & AMAT are outperforming, LRCX & TEL are underperforming with KLAC somewhere in between.
Increased China WFE spending on legacy tools is helping offset ongoing declines from memory and Logic/Foundry

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Aug 19

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

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

In today’s briefing:

Japan Weekly | Stocks Lower
Signs Abound that Asia Gaming Gaining Strength Despite China Macro Woes

Japan Weekly | Stocks Lower

Indiscriminate selling of Japanese stocks with only 10% of stocks up on the week – Topix -3% lower week-on-week
Lots of scary headlines with US mortgage rates hitting 20 year highs and China’s real estate sector imploding
We highlight the stocks that have been moving in the market this week

Signs Abound that Asia Gaming Gaining Strength Despite China Macro Woes

By Howard J Klein

Decline in China economy has tinted investor views into the Asian casino sector. But valuations are attractive.
GGR continues to gain but high youth unemployment blemishes estimates of the return of younger demos who comprise a key segment of Macau visitors.
Strong entry points for Wynn Macau and Sands China persist, but investors still appear to be hesitant to enter the sector until more visible signs of China recovery begin.

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Aug 18

Daily Brief Thematic (Sector/Industry): Ohayo Japan|Global Yields Hit 20Yr High and more

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

In today’s briefing:

Ohayo Japan|Global Yields Hit 20Yr High, Tech Investors Head for Exits; NUGGET: Trapped in Russia?
China Property Developers In Distress – Weekly News & Announcements Tracker | 11-17 August 2023
Southeast Asia Is Looking Mighty Fine to China’s Data Center Firms

Ohayo Japan|Global Yields Hit 20Yr High, Tech Investors Head for Exits; NUGGET: Trapped in Russia?

OVERSEAS. Global Yields hit 20 year high; US Yield continue upward trajectory; US Mortgage Rates above 7%; Tech Investors heading to exits; China steps up battle to protect Yuan.
JAPAN. NKY Futures -0.9% vs Cash; USDJPY 145.9; Japan Authorities adopt wait and see approach on the USDJPY; Unpopular Kishida to call snap election ?
NUGGET. Russia-Ukraine conflict/proxy war vs West recently saw Russia seizing the local operations of Calsberg and Danone. Japanese companies hanging in Russia could be at risk.

China Property Developers In Distress – Weekly News & Announcements Tracker | 11-17 August 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

Southeast Asia Is Looking Mighty Fine to China’s Data Center Firms

By Caixin Global

Chinese data center firms are ramping up their overseas expansion to ride the artificial intelligence (AI) wave, especially in Southeast Asia, said a senior executive at GDS Holdings Ltd., one of the country’s largest data center operators.
While traditional computing requires proximity to the end-use market, AI computing power is more oriented towards natural resources, and Southeast Asia has both resources and cost advantages, said Jimmy Yu, senior vice president of international business at GDS in an interview with Caixin on July 27.
“Developing AI computing power requires a resource-rich region to carry out training and inference in large models. Southeast Asia has rich land and power resources, and the costs are much lower than in the Middle East, Americas, or Europe,” Yu said.

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Aug 17

Daily Brief Thematic (Sector/Industry): Ohayo Japan|Fed Minutes Rekindle Fears of More Hikes; NUGGET: Toyota & FCVs – A Side Bet to Keep ? and more

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

In today’s briefing:

Ohayo Japan|Fed Minutes Rekindle Fears of More Hikes; NUGGET: Toyota & FCVs – A Side Bet to Keep ?

Ohayo Japan|Fed Minutes Rekindle Fears of More Hikes; NUGGET: Toyota & FCVs – A Side Bet to Keep ?