Thematic (Sector/Industry)

• OVERSEAS. SPX broke 4 day winning streak as JOLTS data showed slowing labor market; UST Ylds fell, with 2Yr hitting 3.82% – inflation beaten?; Jamie Dimon offers downbeat outlook
• JAPAN. NKY Futs -0.7% vs Cash; USDJPY 131.7;  Strong Mar SSS continue from JP retail – Fast Retailing 11.9% as Inbound demand recovers; Japanese Co’s sorely lagging in Cybersecurity
• NUGGET. Japan is fighting a losing battle for STEM talent. Demand is there – companies can pay, but legacy rigidities are hindering change and threatening the very survival of firms.

• OVERSEAS. SPX rose +0.4% lead by gains in Energy, which was well bid on OPEC+ surprise cut; ISM Manf  PMI print weaker; Rates retreat as US 2Yr dips below 4%
• JAPAN. NKY Futs +0.1% vs Cash; USDJPY 132.4; BOJ Tankan reading points to weaker manufacturing; Potentially complicates BOJ exit; Activist ValueAct Presses Seven & I
• NUGGET. Watch FY3/24  Japan Total Payout Ratios – The Heat is On ! as JP Corporate significantly lags in Total Payout Ratios, while also sitting on ¥100 trn of cash.

• China online marketplaces are entering maturity phase of slow but steady growth. While markets have lingering concern about competition intensifying, we see the landscape stabilizing rather than deteriorating.
• Early yet clear signals are flashing that incumbents like Alibaba are regaining footing whereas challengers such as PDD and Douyin are losing momentum.
• Alibaba is our top pick for its improving fundamentals and discounted valuation. We are positive on Meituan for the near term but underweight PDD and see JD fairly priced.

• Membership of RISC-V International grew 26% in 2022 and there are now over 3,180 members across 70 countries. 
• There are more than 10 billion RISC-V cores in the market and there are tens of thousands of engineers working on RISC-V initiatives globally. 
• Most RISC-V ventures remain pre-IPO, making investment in the future of RISC-V difficult. However, there is one publicly listed company that may provide a solution.  

In the next installment of our Webinar Wednesdays, we go live with Smartkarma Insight Provider, Pyari Menon as he will be sharing with us his top stock picks based on data mining. Join us as we hear his insights about his stock picks, as well as his methods on determining his choices. From the current trends, to what’s coming next, join us in this installment as we hear more from Pyari.

The webinar will be hosted on Wednesday, 12 April 2023, 17:00 SGT/HKT.

Pyari Menon has over twenty years of experience in the industry, having worked on both the buy and sell-side including at Goldman Sachs, Credit-Suisse, Deutsche Bank, Intellectual Ventures, Tano Capital, and Franklin Templeton. His coverage has been in technology and mid-caps across various geographies including Taiwan, ASEAN, India, the US, and Europe.

• Global stocks rose again this week, with the MSCI World index and the S&P 500 gaining 3.61% and 3.33%, respectively.
• The small-cap Russell 2000 gained 3.71% and the NASDAQ was up a similar 3.36%.
• Cannabis stocks as represented by the MSOS ETF fell 2.28% on the week.

• OVERSEAS. Strong close to SPX on Friday +1.4% on the Day; 3.5%WoW; +7.0%QTD; Light Macro calender this week with Job report Key; OPEC+ surprise cut; Tesla Misses 1Q
• JAPAN.  NKY Fut +0.7% vs Cash; USDJPY 132.9; At the start of the new fiscal year, strong tailwinds ahead for Japan: BOJ normalization; Shareholder AGMs; Shareholder returns improvements; Bullish !
• NUGGET. Labor Mobility Needed for Sustainable Wage Growth in Japan. This is essential to extend the gains made this year, or we risk reverting to the status quo.

• The three companies we write about this week are Tata Consultancy Svcs (TCS IN) , LG Chem Ltd (051910 KS) and CJ Cheiljedang (097950 KS)   
• For the nineteen weeks since inception ended 31 March the combined innovation portfolio was +2.4%, versus DJIA -1.4%, S&P500 +3.6%, Nasdaq +9.7%, Russell2000 -2.6%, MSCI-ACWI-ETF +4.9%, all in US$ terms
• For the nineteen since inception ended 31 March the small cap portfolio was up 8.0%, the mid cap portfolio was up 3.2% and the large cap portfolio was up 2.1%

• While other market narratives are swirling including inflation trends, regional bank contagion risks, and Fed Chair Powell’s next move, not enough attention is getting paid to background maneuvering by China and Russia and other “BRIC” alliance members to attempt to slowly erode and undermine the role of the US dollar in the global financial system.
• BRICS stands for the group of five nations: Brazil, Russia, India, China, and South Africa, with poised expansion via rumored applications from Saudi Arabia, Turkey, and Egypt.
• President Nixon took the U.S. dollar off the gold standard in 1971 – the end of the era of commodity-based money and replaced it with “inside money” or Treasuries which removed the limit on the amount of currency that could be printed. 

• Gordon Moore, co-founder of Intel in 1968, has died at the age of 94
• Arthur Rock raised $2.5 million to kick-start Intel in a single day. He did so without any formal business plan from the founding duo. He’s still alive to this day. 
• While Noyce was charismatic and loved the limelight, Moore was the quiet revolutionary in the background who nurtured Intel to become the most important semiconductor company on the planet

• The Global Emerging Markets weekly provides a summary of the key news and related developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.
• Macro data points:South Korean retail sales, Malaysian GDP growth expectations, Chinese PMI data.
• Companies mentioned:Baidu (9888 HK), PDD Holdings Inc (PDD US), Saudi Aramco (ARAMCO AB), Alibaba Group (9988 HK), SK Hynix (000660 KS), JD.com Inc. (9618 HK)

• Intel recently hosted a webinar on the company’s Data Center & AI group strategy
• Intel has the broadest range of compute processor types on the market including CPU, GPU, FPGA, ASIC etc, but has lost its competitive edge to AMD on the server side
• Regaining server leadership will require home runs on both Granite Rapids and Intel 3 in 2025

• Commercial vehicle industry in India facing challenges due to increasing discounting trend, implementation of new regulations, and economic slowdown.
• Possibility of Tata Motors Ltd (TTMT IN) regaining lost market share at the cost of Ashok Leyland (AL IN), but industry highly competitive.
• Finance Ministry warns of El Niño conditions, leading to weaker monsoon in India, dampening auto sales.

• The Nikkei and Topix finished the week around 2.5% higher. That’s the second week in a row,
• Equity markets buoyed by positive Chinese macro data, especially the Non-Manufacturing PMI, pointing to the highest reading since May 2011
• The Tokyo Stock Exchange is focused on stocks that are trading below book value. So is the market….the leading gainers were all low-PB stocks

• OVERSEAS. SPX Rally continues with further Tech gains; White House call for tighter Bank regulations; Trump indicated for hush money payment;  US SEC seeking to ramp up Cryto oversight
• JAPAN. NKY Futs +0.6% vs Cash; USDJPY 132.7; JP Equities to close quarter with >6% gains; TSE ramps up rhetoric againsts low PBR stocks; GIC lifts JP investment; Citadel Back
• NUGGET.  BayCurrent, – exploiting Japan’s Digital and Salary Gaps. With inflation rising in Japan, we expect increased DX spending and more skilled IT professionals to join BayCurrent. We remain bullish.

• Chinese artificial intelligence leader SenseTime plans to launch its own chatbot model in mid-2023, the company said, becoming the latest tech company to join the global rush sparked by OpenAI’s ChatGPT.
• Hong Kong-traded SenseTime said it made major progress in natural language processing and successfully developed a large pretrained model which will be rolled out in the middle of this year.
• The model has been trained with more than 100 billion parameters to improve the performance of text generation and human-computer dialogue, SenseTime said Tuesday during its earnings call.

• Baba: Baba management holds a call with investors to explain recent movements. 
• 700HK/ 1024HK/ BILI/ BIDU：Wechat Open Class is held, more features are announced（+/-/-/-）
• ATAT：Accor formed alliance with Douyin to further explore independent growth (+)

• OVERSEAS.  Choppy Session with SPX closing -0.2%;  Tech down again as reversal continues;  US 2Yr yield back above 4%, Alibaba +14% split to unlock value; Micron after hours-worst over?
• JAPAN. NKY Futs -1.0% vs Cash; USDJPY 130.9; US-Japan strikes deal on EV battery materials Under IRA; Japan’s FTA fine with MSFT-ATVI, -ve Sony; Alibaba Split +ve Softbank
• NUGGET. Panasonic – Potential beneficiary of new IRA related deal with the US. Could see IRA EV tax credit rise from ¥172bn/year to ¥228bn/year.

• The Chinese government and the destination countries have publicly stated that they can visit each other.
• Higher ridership is the main result of this theme while consumption could also accelerate but on-the-ground research has proven Chinese tourists are not there yet. 
• Keisei Electric Railway Co (9009 JP) , Comfortdelgro Corp (CD SP) , Airports of Thailand (AOT TB) and MTR Corp (66 HK) are the main transport beneficiaries.

• Baba： Alibaba is to establish 6 business units and could pursue independent listings（+）
• BIDU： Baidu release large-scale model “Wen Xin Qian Fan” for enterprise（+）
• ATAT： Atour Lifestyle: Huazhu reported 4Q22 financial results and operating performance（+）； Accor striking on its own following departure from Huazhu and Jinjiang, opening new possiblities for collaboration（+）

• OVERSEAS. SPX carve out gains on relief Bank rally; Energy leads on Oil supply distruptions; Tech lags on profit taking; Crypto in spotlight as US cracks down on Binance/CEO CZ
• JAPAN. Nikkei Futs -0.5% vs Cash; USDJPY 131.6;  Diplomatic Row btw Japan-China brewing on arrest of Japanese national for spying; SMFG expands in Vietnam; Bullish Toray MTP
• NUGGET. Softbank just cannot catch a break. Son-san ARM IPO to be wildly successful. $70bn IPO Valuation seem a tall ask. Can Son-san pull this one off ?

• While most HK equities are still trading at attractive valuation, it does not mean they can re-rate and many of them can remain value traps
• However with the banking crisis, asset owners are moving their capital to Asia.  Hong Kong gov is doing everything to attract family office business
• This, along with improving macro outlook, can drive re-rating.  BUY SHKP 16 HK and NWD 17 HK

• Tech Heavyweights Shouldering the Load- Caution Flags Waving Since the end of 2022, few and fewer big cap tech names are now carrying the overall S&P 500 index performance.
• As of last Friday’s close, the S&P 500 is up about 2% YTD. However, without the contribution of chip maker Nvidia (NVDA) it would be flat YTD.
• Since the end of 2022, few and fewer big cap tech names are now carrying the overall S&P 500 index performance.

• BABA: Jack Ma appears in Hangzhou on heels of State Council’s China Development Forum (+)
• XPEV: Xpeng P7i’s lead time extends to 8 weeks on its APP
• LKNCY / BABA: Starbucks and Amap collaborate on “Drive-Thru” service(//+)

• The WTR Sustainable Index outperformed the broader market, rising 4.0% W/W versus the S&P 500 Index (up 1.4%), the Russell 2000 Index (up 0.5%), and the Nasdaq Composite Index (up 1.7%).
• Advanced Transportation Solutions (70.3% of the index) drove the index performance, rising 5.5%, while Industrial Climate and Ag Technology (22.1% of the index) was up 0.5% and Energy Technology was up 0.7%.
• Top 10 Performers: PSIX, BRDS, PTRA, NGPHF, TGEN, GVP, VIHD, ENG, NIO, EFOI

• OVERSEAS.  SPX +0.6% on intraday bounce; Defensives led w/Utilities; Financials lag as Banking fears persist; Rates down on recession view WHILE Fed signals more hikes; MSFT-ATVI deal closer to approval
• JAPAN. NKY Futs -0.9% vs Cash; Weaker USDJPY 130.7 ;  Kishida Approval Rating Rises; Feb Inflation 3.1%;  ValueAct takes off gloves with 7&i; Shippers in focus with ex-div this week.
• NUGGET. 7&i: Activist ValueAct goes Full John Wick calling for removal of 4 Directors, including Chairman/CEO Isaka. 2023 could be the year of accelerated reforms.  Stock looks attractive post sell-off.

• After a multi-year drop in ownership, Global EM fund exposure in the Tobacco sector is on the rise.
• Tobacco remains heavily under-owned, but key EM funds are raising allocations, led by GQG Partners, Virtus, BNY Mellon and Allianz. 
• ITC Limited has been a key beneficiary of inflows and stands as the most widely owned stock in the sector, followed by KT&G Corp.

• BABA/ JD/ PDD/ VIPS: Tmall outlines upcoming changes to its platform (-/-/-/-)
• LI: Li Auto CEO reveals six pure EVs in pipeline(+)
• 700HK/NTES/BILI/: Game industry in general:  Domestic game codes published by NPPA（+）

• If Pogos are ultimately banned, Macau and Philippine brick and mortar casinos could see considerable revenue benefits intermediate and long term.
• There is little chance online gaming will ever be legal in mainland China, but demand continues to grow as citizens support a huge online industry in the Philippines.
• Now politicans are questioning the risk/reward of inaction on curbing Chinese participation as both operators and customers of online casinos.

• The National Health Commission issued a new document, aiming to relax the approval of large medical equipment configuration, which would be a significant benefit for the industry.
• Whether the “Me-Better” strategy of pharmaceutical enterprises is reasonable or not depends on the understanding level of disease/molecule of the followers and the basis for early clinical project establishment.
• Unlike overseas markets, the core asset of China pharmaceutical industry isn’t innovative drugs but TCM considering policy environment.We recommend investors leave a place in portfolio to invest in TCM companies.