In today’s briefing:
- Stabilising China’s Residential Property Market Produces Unintended Consequences
- Political Risk and Investing: Seeking Opportunity Amidst Disruption
- Credit Watch – What’s Going on with Credit Spreads?
- The Week That Was in ASEAN@Smartkarma – Mitra Keluarga’s Growth, NFCX Leads in 2W EVs and BFIN’s Era
- CX Daily: Lower Fares and a Regional Focus Help China’s Private Airlines Win Race to Profitability
- AFC Iraq Fund May 2023 Update: “Market Takes a Breather, While the Currency Stabilises”
- The World Has a New No. 2 Copper Supplier – El Nino Effects Start to Sink In?
Stabilising China’s Residential Property Market Produces Unintended Consequences
- Rising stress in China’s residential real estate sector become more evident in 2022. Tough market conditions in lower tier cities will depress national home sales in 2023.
- The People’s Bank of China lowered mortgage rates to stimulate housing demand. Removing the national mortgage rate floor on a city-by-city basis has, however, created an uneven funding environment.
- Removal of the national mortgage rate floor has benefitted first time buyers, but existing mortgagors have engaged in prepayments to the detriment of banks’ profits and consumer spending.
Political Risk and Investing: Seeking Opportunity Amidst Disruption
- Frequent readers of our blog posts and research papers likely are well acquainted with our underlying philosophy that commodity prices alone do not provide a compelling rationale for investing in real asset businesses
- Instead, as a result of decomposing the returns of individual real assets businesses, we have found that these stocks often exhibit a broader range of return drivers
- One such driver is political risk.
Credit Watch – What’s Going on with Credit Spreads?
- Credit spreads remain low amidst banking turmoil and a weakening economy (despite the job market)
- The current risk appetite in the equity space and other markets spills over to credit spreads
- Shorting everything cyclical and going long defensives would be THE play if spreads increase
The Week That Was in ASEAN@Smartkarma – Mitra Keluarga’s Growth, NFCX Leads in 2W EVs and BFIN’s Era
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
- The past week saw insights on Mitra Keluarga Karyasehat Tbk (MIKA IJ), NFC Indonesia (NFCX IJ), BFI Finance Indonesia (BFIN IJ), Challenger Technologies (CHLG SP), and Aapico Hitech (AH TB).
- There was also an insight on Indonesian macro and insights on PT Avia Avian (AVIA IJ), Saigon Beer Alcohol Beverage (SAB VN), and the introduction of Thai SDRs in Singapore.
CX Daily: Lower Fares and a Regional Focus Help China’s Private Airlines Win Race to Profitability
- Airlines /: Lower fares and a regional focus help China’s private airlines win race to profitability
- PMI /: China’s factory activity gets back to growth, but recovery remains patchy, Caixin PMI shows
- NDB /: BRICS-backed New Development Bank issues record $1.2 billion of panda bonds
AFC Iraq Fund May 2023 Update: “Market Takes a Breather, While the Currency Stabilises”
- The AFC Iraq Fund, and the market, took a breather after a great three-month run from the January 2023 lows, during which the fund was up 49.1%, and the RSISX USD Index was up 43.8%.
- For the month, the AFC Iraq Fund was down an estimated 11.3%, underperforming its benchmark, the Rabee Securities RSISX USD Index, which was down 8.7%.
- For the year, the AFC Iraq Fund is up an estimated 31.2%, outperforming the index’s increase of 24.9%.
The World Has a New No. 2 Copper Supplier – El Nino Effects Start to Sink In?
- El Nino effects start to sink in? During last week grain prices saw building up some momentum.
- The DSCI drought index also surged after many weeks of continuous declines.
- Nevertheless, we should actually see lots of rain during the summer in the US if we’ll see a classic El Nino.
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