Thematic (Sector/Industry)

• US stocks ended sharply lower on Tuesday amid heightened geopolitical tensions as Iran launched over 100 ballistic missiles at Israel
• Nike shares fell 2% after hours despite Q1 earnings beating expectations at $0.70 per share vs. $0.52 estimated.
• Mizuho is negotiating to acquire a stake in Rakuten Group’s credit card unit, aiming to expand its fintech services

• Profit taking hit tech/semi’s as tensions rapidly escalate in the Middle East, causing defense and oil related names to move higher
• NEC remains overlooked as a defence play in Japan despite the MoD’s growing for budget for electronic warfare and satellite defence capabilities
• Renewables in the US are leading the way YTD, although Japan is far behind the curve despite PM Ishiba being a pro wind/solar and hawkish towards nuclear.

• Budgets are always important for investors.
• The imminent Budget, at the end of October, will be doubly so, because it is the first from the new Labour government, and it has already signalled the need to fill an alleged £22bn black hole, while ruling out changes to more than half the tax base.
• That implies a lot of the pain will be felt by investors.

• The wait is finally over.  The Fed delivered a 50bps rate cut in September meeting, kick- starting a new rate cut cycle
• The rate cut is an absolute game changer for Hong Kong real estate.  Physical market will recover with lower mortgage rate and companies will enjoy lower borrow rate
• With the macro backdrop in US and China, Hong Kong is well positioned for as strong re-rating with mega catalysts ahead – Buy HK real estate, especially SHKP and NWD

• China’s SSE Composite Index surged 18% due to government stimulus measures, focusing on real estate and financial sector revival.
• Stimulus boosts global commodity demand, while India’s domestic market remains resilient despite minor FPI rebalancing towards China.
• China’s recovery doesn’t significantly impact India’s growth, driven by strong domestic inflows and stable market conditions.

• U.S. stocks closed September and the third quarter with fresh records despite Federal Reserve Chair Jerome Powell’s  signaling no rush for further rate cuts
• Shigeru Ishiba, newly elected president of Japan’s ruling LDP, announced plans to dissolve the lower house and hold a general election on October 27.
• SoftBank’s Vision Fund will reportedly invest $500 million in OpenAI’s $6.5 billion funding round, valuing the AI startup at $150 billion

• Plenty of Ishiba trades to pickup this morning after yesterday’s panic.
• Defence related saw some initial profit taking after pricing in some gains, but KHI and NEC remain attractive on the long side.
• Selective Inbound tourism, domestic revitalization, and China plays should snap back fairly quickly with Ishiba unlikely to upset voters ahead of elections.

• Larsen & Toubro (L&T) plans to generate INR 40,000 crore in pre-sales revenue through aggressive land acquisition and portfolio expansion.
• NLC India aims to reach a mining capacity of 1 MTPA for critical minerals by FY30
• Reliance’s Viacom 18-Disney Merger Approved, Creating India’s Largest Media Empire

• Furniture and Furnishing stocks performed well against the major market indices, where the relative calm at the level of the overall indices belied the leadership churn and rotation back into tech following the recent Fed rate cuts (1).
• The Water Tower Research Commercial/Contract Furniture index (+0.5%), Residential Manufacturers & Suppliers (+4.5%), and Home Goods Retailers index (+1.0%) we up all up more than the DJ30 and SP50 (both +0.3%) while the Mass Retailers index (-1.5%) and R2K (-0.2%) were both down.
• In a market where technology stocks are again leading and big caps are outperforming smaller caps, the relative outperformance of the Water Tower Research indices is notable. 

• Since the BoJ interest rate hike in July, the Yen appreciated ~5% to ¥142.74. Considerable amount of appreciation may be dilutive on the overall performance of export-oriented industry.
• Top healthcare players have assumed a higher exchange rate (than the current prevailing rate) for their respective full-year FY25 guidance.
• With benefit of favorable foreign exchange gradually fading and potentially diminishing guidance, investors need to be selective in picking healthcare bets in Japan.

• Higher Exchanges is a weekly cannabis-investing conversation hosted by WTR’s Head of Cannabis Jesse Redmond and Morgan Paxhia, co-founder of Poseidon.
• Those interested can listen to the show on Apple Podcasts, Spotify, or X Spaces.
• This week’s show began with a discussion about Senator Ron Wyden’s Cannabinoid Safety and Regulation Act, which proposes more regulation for the hemp industry. 

• We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
• Last week, BMY received landmark antipsychotic approval, while BHVN finally scored a win in rare genetic SCA.
• AMGN had approvable data in atopic dermatitis and gMG, but not enough to dethrone REGN and ARGX. 

• Stocks ended the week on a positive note, despite mixed performance on Friday, as investors focused on a key inflation report
• Japan’s incoming Prime Minister Shigeru Ishiba advocates for accommodative monetary policy to support economic recovery, despite previous criticism of aggressive easing
• Sumitomo Metal Mining will establish a mass production line for SiC substrates by FY2025, investing tens of billions of yen

• New LDP leader and Japanese PM favours interest rate normalisation
• This supports our outlook for a strengthening JPY against the USD
• The Japanese central bank may now face pressure to raise rates

• The median stock in our Dogs of Topix basket outperformed the median stock in the Topix 400 by 4% through Sept 2024.
• This is below the average of 7% achieved by such stocks over the past 9 years, but it was a much tougher stretch than it looked. 
• Do we need to re-think? Much can be learned comparing the outperformers, whose median return was +34%, compared to the underperformers, which declined 23%.

• The stimulus policy this time is more to convey a signal that  “China will resolutely defend the bottom of the stock market”, and more importantly, complete the pricing of important assets.
• When global central banks really need to address US’ soaring debt risk,the process of reassessing the dollar’s status as a currency begins,which is the logic behind RMB’s rally/gold’s record highs.
• The optimal solution to the dollar problem is a global depression, and China will not be immune. So, the current rally in stock market may not be sustainable.

• Over the weekend, Shanghai, Shenzhen and Guangzhou, 3 of the 4 tier-1 cities, announced policy to loosen and support the property market
• China property stocks are very policy-driven.   We think there will be more policies to be announced.  Hence it is not too late to chase the rally
• We think COLI 688 HK, Longfor 960 HK and Sunac 1918 HK offer attractive upside and decent risk-reward profile

• Since the US started sanctioning Huawei in 2017, the China tech giant has maneuvered into many new fields. This time, its HIMA (Huawei Intelligent Mobility Alliance) is showing renewed momentum;
• China is the greatest EV market in the world. But what is being masked in the robust growth is the divergence between BEV and PHEV, and Huawei’s role in PHEV;
• We expect the trend to continue as Chery, JAC and BAIC will launch their HIMA models in 2025. Most importantly, these vendors gain share in the mid-to-high price segments.

• U.S. markets remained relatively stable, with major indices flat to up 1% for the week. Treasury yields rose slightly, with the 10-year yield up nearly 10 basis points to 3.8%.
• Meanwhile, China, grappling with a property slump and likely to miss its 5% growth target, announced substantial stimulus measures.
• Japanese stocks rallied strongly this week, with the benchmark Nikkei index surging 5.6% and the broader Topix index gaining 3.7%.

• NTES US: Blizzard’s <Hearthstone> Resumes Operations in China Today with High Player Enthusiasm (+)
• BABA US/PDD US/AMZN US/SHEIN: AliExpress to promote new merchant models and faster logistics at Double 11 and Black Friday promotions (+/-/-/-) 
• BABA US/PDD US/JD US: Taobao/Tmall to offer no extra service fees on “buy-now pay-later” orders during Double 11 (-/-/-)

• Arrow Exploration (AXL LN/CN)C; Target price £0.70 per share: Another horizontal well with high flow rate – The fourth horizontal well at Carrizales Notre (CNB HZ-5) has been put on production at a gross oil rate of 2.7 mbbl/d (1.35 mbbl/d net to Arrow) with a water cut of 11%.
• This flow rate compares favourably with CNB HZ-4 that was put on production at a gross oil rate of >2.5 mbbl/d (8% water cut).
• Overall gross oil production from the three other horizontal wells is ~5.62 mbbl/d (~2.8 mbbl/d net to Arrow) including 2.1 mbbl/d for CNB HZ-4, 1.9 mbbl/d for CNB HZ-3 and 1.6 mbbl/d for CNB HZ-1.

• BEKE US/BZ US/ATAT US/3690 HK/TCOM US:September Politburo Meeting Unusually Discusses Economic Topics, bodes well for catering and tourism consumption, Employment, and Real Estate(+)
• 2618 HK/002352 CH: JD and Alibaba reconcile, JD Logistics to launch on Taobao and Alipay to launch on JD.com (+/-)
• NIO US: NIO Lowers Battery Swap Service Fees to Encourage Frequent Battery Swaps(-)

• Stocks rallied on Thursday, with the S&P 500 climbing 0.40% to a record high of 5,745, driven by strong U.S. economic data and corporate earnings
• Shares of Super Micro Computer fell over 12% after a Wall Street Journal report revealed a Justice Department investigation into alleged accounting manipulations
• Nissan will acquire an additional 5.03% of its shares from Renault for ¥79.8 billion, reducing Renault’s stake further

• On 23-Sep-24, SEBI released a study on Trends in Equity Derivative segment. 
• In FY24, Proprietary traders earned the highest gross profit, followed by FPIs while the individual category faced the largest gross loss.
• In FY24, 91.1% of individuals incurred net losses in F&O trading, slightly improving from 91.5% in FY23 and 90.2% in FY22.

• Big gains for semi related after Micron’s big beat, although the lions share of this may have priced in during Asian trading yesterday.
• China related names in Japan look set to continue gains with HSI futures strong overnight and names like Estee Lauder +10% and L’Oreal +7% overnight.
• Election day in Japan, with voting kicking off at JST, results, or at least a strong indication should be known before market close today.

• Obvious policy efforts are being made to drive consumption and improve consumer confidence.
• Previous attempts have resulted in increased savings but policy direction has changed
• Beaten-Up consumer names have a good risk-reward at this stage

• 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 the sources

• US stocks closed mixed on Wednesday after hitting all-time highs. The S&P 500 dipped 0.2%, reversing earlier gains, while the Nasdaq finished flat.
• Micron’s stock rose 10% in after-hours trading following a strong earnings report.
• ValueAct Capital, a U.S. activist investment fund, has acquired a 5.94% stake in Sanwa Holdings

• China considers launching a stock stabilization fund which could release RmB800B in liquidity support for the market.  Securities firms and insurance companies will be the major beneficiaries.
• The mega merger between  Haitong Securities Co Ltd (H) (6837 HK) and Guotai Junan Securities (2611 HK) could be the precursor to further industry consolidation.
• Hong Kong trading volumes and IPO’s set to surge as Beijing lifts sentiment.

• Memory names with high exposures to Micon such as Micronics will be back in focus.  
• Microsoft paying overs for stable nuclear energy should put the spotlight back onto UPS and help lift Fuji Electric once again. 
• Capcom’s Monster Hunter Wilds looks fully priced and with the TGS about to come and go this this weekend, further catalysts are lacking with the stock close to ATH. 

• MNSO US: MINISO Acquires 29.4% Stake in Yonghui Superstores for RMB6.3 Billion, Becoming Its Largest Shareholder(-)
• BEKE US:Stimulus monetary policies bodes well for real estate and consumption(+)
• BEKE US:Chongqing Agency Decco Real Estate Joins Beike, Bodes Well for Market Share Gains(+)

• L&T Secures Rs 10,000-15,000 Crore Order in the Middle East
• Power Grid Corporation Shares Rise After Winning Key Transmission Projects
• NHPC to Raise INR 2,300 Crore for Expansion through Securitization

• JD US/1810 HK/BABA US:NRDC announces positive results for “old-for-new” trade-in during September (+)
• BILI US:Bilibili’s <Three Kingdoms: MDTX> Shows Robust Gross Billings Performance After Season 3 Update (+)
• PDD US/BABA US/JD US: PDD reduces the minimum withdrawal threshold for funds (/)

• The S&P 500 rose 0.25% to a record 5,733 on Tuesday, buoyed by a nearly 4% jump in Nvidia shares
• U.S. Consumer confidence dropped sharply in September to 98.7, down from 105.6 in August, marking the largest decline since August 2021
• Activist investor, City Index Elevens, has taken a 5.08% stake in Aichi Steel, a Toyota affiliate

• China names will be in focus with yesterdays gains holding overnight in the US.
• Worth looking at Japanese names previously bucketed as China plays which could now be squeeze targets with large short interests.
• The list is long, but some names which could squeeze on the improved sentiment include Shiseido, Daikin, TOTO, Yamaha Corp and Nabtesco.

• While the worst-performing stocks in 2023 have gone down by an average of 17.6% YTD, their pick-up in the last month is significant at 19.9%. 
• The cut in US interest rate and the Chinese government’s stimulus measures will benefit the HSI, providing room for shifting position from heavily overweighted names to underweighted.
• Li Ning (2331 HK), Meituan (3690 HK), Wuxi Biologics (2269 HK), and Zhongsheng Group (881 HK) are the key “dogs” in last year that are worth a look. 

• The WTR Sustainable Index was up 2.2% W/W versus the S&P 500 Index (up 1.4%), the Russell 2000 Index (up 2.1%) and the Nasdaq Index (up 1.4%).
• Energy Technology (13.5% of the index) was up 0.7%, while Industrial Climate and Ag Technology (47.4% of the index) was up 2.2%, ClimateTech Mining was up 2.1%, and Advanced Transportation Solutions (20.0% of index) was up 3.6%.
• Top 10 Performers: REE, NGPHF, LICY, SUNW, MVST, FTCI, ENG, GCEH, ORGN, IPWR

• Jerry Derviani, partner at Bengal Capital, discusses investing in the regulated cannabis industry since 2014
• Focus on unit economics and value creation in cannabis companies like Grown Rogue
• Opportunities for growth and success in expanding cannabis markets, such as New Jersey

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

• Beji Sasaki is an unusual investor. He made a name for himself during the bubble economy of the 80s/90s as the ‘takeover man’ and despite not getting too much attention lately, he’s still active in the markets.
• He takes stakes in public companies and aims to improve profitability and wrest control.
• He’s an aggressive corporate raider looking to take control of public companies and maximize profits, a concept that’s anathema in Japan.

• U.S. stocks closed higher on Monday, with the S&P 500 rising 0.3% to a new record high of 5,719
• Tesla (+5%) shares rose after Wall Street issued a bullish delivery forecast ahead of its October robotaxi even
• Six of Japan’s seven major automakers are set to break records in capital expenditures and R&D spending this fiscal year

• Japan set to tick higher with more cuts on the horizon and markets mostly unchanged after yesterdays holiday.
• 6758 Sony announced a ‘State of Play’ where it will showcase 20 upcoming PS5 and PS VR2 games from 3rd party studios a day ahead of the Tokyo Games Show.
• Defence names may be in focus after Japan fighters fired flares at a Russian military plane which violated Japanese airspace three times off Hokkaido on Monday afternoon.

• AI is being recognized as a megaforce with trillions of dollars of impact on the global economy and broad implications across various sectors
• Investors are increasingly interested in the AI theme and its potential impact on portfolios, with a focus on what’s next in AI development
• The AI theme is still in its early stages, with advancements in technology, data growth, and computing power expected to drive exponential growth and value in AI over the next decade.

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

• HDFC Bank is set to close a loan sale worth over $1 billion by September 2024
• Reliance Consumer Products Ltd. (RCPL) plans a nationwide FMCG expansion, extending its in-house brands
• SJVN generated 8,489 million units of green energy in FY24, despite hydrological challenges

• Meta faces $1.4 billion Texas biometric lawsuit settlement and a €1.2 billion GDPR fine for data transfers, alongside an FTC antitrust challenge targeting Instagram and WhatsApp acquisitions.
• Apple’s $26 billion annual deal with Google is under DOJ investigation for antitrust violations, while its App Store commission model faces increasing scrutiny, threatening a key revenue source.
• Google, holding 90% of the search market, is battling DOJ lawsuits targeting its advertising dominance, risking forced divestitures that could severely impact its $224 billion annual ad revenue.

• With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.
• Sands China (1928 HK), while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. 
• Based on the gearing level, floating rate proportion, and YTD performance, New World Development (17 HK) and Hang Lung Properties (101 HK) are the two potential best bets.