In today’s briefing:
- Anhui Conch Cement (914 HK): Where Are We In The Cycle?
- Buys Within Global Energy, Health Care, and Utilities; Bullish Outlook Intact on Global Equities
- Part Six: Commodities: Priced for a Downturn
- Saudi Aramco and China’s Rongsheng Plan Closer Tie-up
Anhui Conch Cement (914 HK): Where Are We In The Cycle?
- Anhui Conch Cement (914 HK) is trading at a historical low forward P/B of 0.5x, compared to an average of 1.2x for the last decade.
- In the long term, China cement will likely see much lower volume and lower cement prices in the short term, but eventually rising cement prices due to better supply picture.
- As the lowest cost producer, Anhui Conch stands a very good chance to win out in the long term and potentially more than double its current market share.
Buys Within Global Energy, Health Care, and Utilities; Bullish Outlook Intact on Global Equities
- Global growth stocks that have significantly outperformed since the October 2023 lows are starting to pull back, and we believe a continued pause/pullback is likely in these growth areas.
- Meanwhile, we are seeing a clear shift into value and defensives, and we recommend adding exposure to these areas. This type of Sector rotation is common during bull markets.
- Major supports continue to hold, including $98-99 on MSCI ACWI (ACWI-US), 4600 on the S&P 500, 4400 on the EURO STOXX 50, and 2300 on the TOPIX
Part Six: Commodities: Priced for a Downturn
- The clouds of recession and economic slowdown loom over the horizon, casting a bearish shadow on commodity markets.
- Yet, despite many reasons for pessimism, commodity prices have begun to show signs of resilience last week.
- Even though a sustained long-term rally remains uncertain, the current environment seems ripe for a short-term bounce or mean reversion.
Saudi Aramco and China’s Rongsheng Plan Closer Tie-up
- Saudi Aramco and its Chinese partner Rongsheng Petrochemical Co. Ltd. have agreed to deepen their tie-up further by taking a stake in each other’s subsidiaries.
- China’s privately controlled refiner Rongsheng said it signed a memorandum of understanding with Aramco to buy a 50% stake in the Saudi company’s refining unit Saudi Aramco Jubail Refinery Company (SASREF).
- At the same time, Rongsheng plans to sell up to 50% stake in its unit Ningbo Zhongjin Petrochemical Co to Aramco, the world’s biggest oil producer, according to Rongsheng’s filing with the Shenzhen stock exchange on Tuesday.
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