Thematic (Sector/Industry)

In this next #webinar Wednesday, we are glad to welcome Smartkarma Insight Provider Jeroen Blokland. He will introduce the Macro-Sentiment-Valuation framework and we will take a look at the outlook of equities. Jeroen will also show us the rationale behind decisions to chase the year-to-date rally in equities.

The webinar will be hosted on Wednesday, 24 May 2023, 17:00 SGT/HKT.

Jeroen Blokland is an all-round Multi-Asset investor. He is the former head of a EUR 5 billion multi-asset fund range, a speaker, and the founder of True Insights, a provider of independent investment research, trade ideas & well-diversified portfolios. 

• OVERSEAS.  SPX up again as Tech pushes stocks higher;  Biden off to G7 in Japan as market expect a deal on return; Walmart lifts Sales, spurring optimism; Fed Hawks back
• JAPAN.  NKY Futs +1.1% vs Cash;  As Japan Prepares for G7 Meeting, PM Kishida woos Global Semi CEOs; Panasonic tgts 200GW batteries by 2030; Ricoh-Toshiba merge OA-Expect more OA Consolidation.
• NUGGET. Digital Transformation Japan – Still lots to do but legislation passed to expand DX that promotes the expansion in the use of My Number

• Except US banks to move from liquidity risks to credit risks
• Recently released US Senior Loan Officer Survey shows major tightening
• Focus on small banks’ CRE lending and credit card company net charge-offs 

• OVERSEAS.  Risk on as US Equities Jump on Debt Ceiling Hopes; China April House px rise;  Solid US Housing starts; Musk Says 2 new Blockbuster Telsa models to come.
• JAPAN.  NKY Futs 1.4% vs Cash; Japan Equities poised to make new highs on US rally and weaker yen;  Japan GDP print 1.6%, better than expected;  Chinese Tourist Back
• NUGGET. Rapidus aims to rejuvenate Japan’s semiconductor industry by developing advanced 2-nanometer logic semiconductors, with plans for a prototype production line by 2025 and mass production by 2027.

• Wafer demand in 2023 has fallen to just 86% of global capacity, the lowest in a decade
• Demand for Epitaxial wafers (used for Logic) is not going to recover until EOY’23. Demand for Polished wafers (used for Memory) will likely take until H2’24 to recover
• It could potentially take until 2026 for supply and demand to return to balance. 

• Our calls since last year have included focus on Manila’s Entertainment Zone casino stocks taking note of surging growth both before and post covid.
• We continue to guideBUY on the shares as we see growing acceleration of GGR increases.
• Latest results indicate growth both in domestic play as well as growing visitation from nearby Asian origin points, some of which is diverted from Macau.

• Nissan Motor Co. Ltd. posted a sharp drop in its China car sales last year as the Japanese company trailed many of its rivals in shifting toward electrification in the world’s largest auto market, where homegrown electric-vehicle (EV) brands are increasingly gaining traction.
• Nissan sold just over 1 million cars in China in 2022, a 24.3% drop on the year, according to its earnings report released on Thursday.
• In comparison, it booked respective annual drops in car sales of 5.2% and 5.8% in the two previous years. But the country is still the auto giant’s largest market, followed by North America, Japan and Europe, respectively.

• Strong demand for pad-optimal super-spec drilling rigs drove ICD’s solid 1Q23 financial and operating results.
• ICD generated 1Q23 adjusted EBITDA of $21.4 million on revenue of $63.8 million, up 16% from 4Q22.
• Adjusted EBITDA in 1Q22 was $3.6 million.

• OVERSEAS.  US Equities succumbs to Debt Ceiling Impass;  2 sides still far apart; BAML May survey indicate shift to Cash;  US retail sales show consumer resilience
• JAPAN. NKY Futs +0.1% vs Cash as Japan gears up to host G7 this weekend; Japan’s Topix Index closes at the highest since 1990; Ahead of AGMs, bullish MTPs abound
• NUGGET.  Japanese Households Accelerating Shift Shift from Cash into Risky Assets

• We have a whopper! For more than a year, we have been noting how IBC deals have been getting smaller.
• While there have been four $1 billion-plus deals announced so far in 2023, in terms of size, we have not seen anything like the $27 billion pre-money value for the proposed SPAC IBC merger that was announced at the end of last week by SPAC Black Spade Acquisition Co. (BSAQ) and privately held VinFast Auto, a Vietnamese manufacturer of EVs, since the peak of the SPAC euphoria in 2021.
• In fact, this transaction happens to be the third-largest SPAC merger deal in history behind MSP Recovery (LIFW) in July 2021 (TEV $32.6 billion) and Grab (GRAB) in April 2021 (TEV $31.3 billion).

• During the week ended May 12, 2023, there were four increases (one in Energy Technology, and three in Industrial Climate and Ag Technology) 2022 revenue estimates.
• There were four decreases in 2022 revenue estimates for three companies in Energy Technology, and one company in Advanced Transportation Solutions.
• One company in Advanced Transportation Solutions and three companies in Industrial Climate and Ag Technology saw increases in 2022 EPS estimates, while two companies each in Energy Technology and Advanced Transportation Solutions saw decreases in 2022 EPS estimates.

• OVERSEAS. SPX up overnight Beta Factors dominated; Still no deal on the US debt limit but markets clearly expect a resolution.
• JAPAN. NKY Futs +0.8% vs Cash;  Big earnings day yesterday which saw strong earnings from Megabanks; Bridgstone; and a big BUYBACK from Daiichi Life
• NUGGET. The US Debt Limit – too much complacency ?  Markets clearly pricing in 100% probability that this gets resolved..what if..

• 1801HK:  Innovent licensed in KRAS G12C drug obtained NMPA BTD designation but is a late comer（/）
• 1810 HK: Oppo abruptly abandons development of self-developed chips (-)
• 3690.HK: A review of Meituan’s Dazhong Dianping in-store business strategy 

• We track imports for three specific 10-digit Harmonized Tariff System (HTS-10) that define adult mattresses.
• The DoC normally posts detailed HTS import units and customs values on its website ~70 days after the month-end of the month being reported.
• US mattress imports began attracting investor attention after low-cost imports disrupted the production and sales of domestic makers of mattresses, components, and fabric suppliers. 

• Global equities fell last week, as investors digested the latest CPI data and debt ceiling news. The MSCI World Index dropped 0.51%, while the S&P 500 fell 0.25%.
• The small-cap Russell 2000 slid 1.00%, while the NASDAQ bucked the trend and gained 0.40%.
• After two strong weeks, cannabis stocks got crushed. The MSOS ETF ended -17.71% and blue-chip operator Trulieve was down 29.02% last week.

• OVERSEAS. SPX declined by 0.2% on Friday and 0.3% for the week. VIX trading at 17%, near its one-year lows, despite the possibility of a US default. We are wary..
• JAPAN. NKY futures are trading at a 0.6% premium vs Cash; Foreign investors continue to buy; Earnings season continues to see strong improvements to shareholder returns; Remain bullish JAPAN.
• NUGGET.  Comprehrensive IEA report EV Outlook 2023.  EV Sales to reach 14 million,+35%YoY in 2023 – Japanese OEMs continue to lag

• One of the lasting legacies of the COVID-19 pandemic was the acceleration of secular trends which were already in place prior to the start pandemic such as e-commerce, flexible working arrangements, streaming/entertainment at home, digital transformation, MRNA biotechnology, among others.
• Many of these trends in place prior to the pandemic were turbocharged by a quick pivot and responses to adjust to the “new normal” disruption of the dealing with COVID-19 waves, lockdowns, and companies muddling through how to adapt their business model.
• The aftermath of the combination of a bazooka fiscal and monetary stimulus has resulted in the Federal Reserve embarking on the most aggressive interest rate hiking campaign in decades in attempts to arrest and reverse inflation.

• The Japanese stock market remains in an uptrend with the Nikkei hitting a 17-month high
• Global growth expectations remain weak. Key commodity prices lower on weakness in the Chinese economic outlook
• Stocks in Japan moving mainly on earnings reports. Same again next week

• Chongqing Changan Automobile Co. Ltd. plans to speed up the electrification of two of its joint ventures with foreign carmakers, as China’s homegrown electric-vehicle brands increasingly gain market share from fossil fuel-powered car companies.
• The change in the industry was laid bare at last month’s Shanghai Auto Show, where the booths of Chinese brands were flooded with visitors.
• A decade ago, cars built by China’s numerous international JVs would typically be center stage at such exhibitions.

• This note addresses the Monthly Market Pulse (MMP) of incoming orders and sales for March 2023 issued by the Business Institutional Furniture Manufacturers Association (BIFMA).
• About 50+ BIFMA member companies voluntarily submit monthly sales and orders to a national accounting firm that aggregates and reports composite data.
• Neither BIFMA nor any individual member has access to the raw data. We show the monthly data from 2019 to March 2023 under Industry Statistics.

• The clinical trial landscape in psychedelics has evolved significantly over the past five years and has seen significant developments and milestones achieved in the last year.
• There are currently more than 50 active clinical trials investigating the therapeutic value of psychedelic-based compounds as part of a treatment regimen, which includes the more traditional psychotherapy intervention.
• About 60% of these clinical investigations have advanced to Phase II and Phase III stage trials.

• Shein/PDD: Our check and local media reports of Shein’s newly-launched marketplace, and implication to PDD (-)
• PDD/700.HK/BABA/JD: China major Ecommerce platform’s low price strategy in 6/18 promotion (-/+/+/+)
• ZLAB：ZLAB revenue met our expectation while loss greatly beat our expectation on reduced R&D

• WTR-CMI for the week. It was another down week for the market, with both the Russell 2000 (down 0.5%) and the S&P 500 (down 0.8%) losing value.

• Our WTR-CMI index underperformed, losing 1.8%, dragged down by NGVT, ASH, and EAF, as they delivered disappointing results and provided more cautious guidance.

• April auto sales looking up. Germany’s new passenger vehicle sales increased 13% Y/Y, while French sales increased 22% Y/Y.

• Property agents say more government support is needed.  But historically timing and scale of policy is hard to predict
• POEs are still under pressure with bond default.  Latest case is KWG missing debt payment and potential cross default
• Sector’s valuation is almost at all time low and big part of risk is priced in.  But stocks can stay cheap forever.  Monitor the HY bond market as key indicator.

• The overvaluation or undervaluation of China core assets cannot be explained solely by valuation models such as PE/PB/DCF etc., but rather by considering the deep meaning represented by them.
• The so-called policy, strategic, and systemic importance are playing increasingly important role in stock picking process. It’s not wise to just analyze it from bottom-up perspective without considering top-down perspective.
• There’s no eternal,universal,absolute truth in this world. We’re in the midst of a “unprecedented upheaval in a century”.It’s time to change mindset so investors don’t miss the next valuation takeoff.

• 3690.HK/Douyin: Douyin’s latest strategy in China food delivery market, per Chinese local media reports (-)
• 1024: Kuaishou launches annual eCommerce conference for merchants ( + )
• LEGN：Legend raised another US$350mn, which can support at least one year of operation (+)

• Small US banks are showing sharply higher CRE loan growth in recent weeks
• We would not view this as positive, and more likely off B/S moving on B/S
• CMA shows clear 1Q23 deterioration in CRE loans, perhaps others too

• 1877HK：JUNSHI and Dr. Reddy signed low ball license out agreement for India, Latin America, South Africa and Oceania (-)
• BIDU : Baidu’s Xiaodu will enter smart phone industry (+)
• 1801HK： Innovent and Lilly will fight in obesity/diabetes drug. Positive for Innovent but not positive enough (+)

• It was a volatile week for stocks, as investors digested the latest interest rate news and jobs report.
• On Wednesday, the Federal Reserve raised the benchmark rate by a quarter of a point, marking the 10th straight rate hike.
• The Fed hinted it may soon pause the rate-hike cycle.