In today’s briefing:
- Will Singapore Gain or Lose from Hong Kong and China’s Reopening?
- Pockets of Resilience in the Technology Sector
- Gap Trades in Korean Prefs Vs Common Share Pairs in 1Q 2023
- CX Daily: Where to Now for Alibaba in the Post-Jack Ma Era?
- UK: Workers Demand Forceful Tightening
- Monday Morning Musings
- What’s Working on the Short Side?
Will Singapore Gain or Lose from Hong Kong and China’s Reopening?
- Singapore has been a beneficiary of Hong Kong and China’s pandemic mismanagement and policy missteps, enjoying the relocation of businesses and high-worth individuals.
- Singapore will face increased competition from Hong Kong’s efforts to reclaim some of its lost business and investment activity, but Singapore is well-placed to keep most of its gains.
- The reopenings are a positive-sum game for both of Asia’s financial centres, but relying on its rivals’ mistakes is not a sustainable long-term economic strategy.
Pockets of Resilience in the Technology Sector
- Macroeconomic headwinds are taking their toll on consumer sentiment. Intentions for big-ticket purchases are falling, and firms are experiencing smaller order books.
- Enterprise technology investment will be supported by a range of long-run factors. Demand from this segment will provide a buffer against cyclical challenges.
- The industry will face macroeconomic difficulties and slower growth, but opportunities exist in certain segments and geographies that can take advantage of secular trends.
Gap Trades in Korean Prefs Vs Common Share Pairs in 1Q 2023
- In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 1Q 2023.
- The pref/common shares ratio of the 28 companies in this insight declined from 68.9% on 16 July 2022 to 65% on 16 January 2023, which is a short term reversal.
- We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuel Cell, LG H&H, and LG Chem, which have high discounts for the preferred shares versus their counterpart common shares.
CX Daily: Where to Now for Alibaba in the Post-Jack Ma Era?
Cover Story: Where to now for Alibaba in the post-Jack Ma era?
World elite return to Winter Davos as recession fears mount
China runs short of anti-immune deficiency drug as Covid panic buying clears shelves
UK: Workers Demand Forceful Tightening
- The UK unemployment rate remained at 3.7% in Nov-22, and another rise into yearend no longer looks likely. Resilience should ease in Q1 amid vacancies’ renewed declines.
- Relatively stable unemployment and rising wage settlements suggest the cycle is not yet burning out. Pay growth trends remain inconsistent with the inflation target.
- Monetary policy faces a double threat from excessive inflation expectations and cyclical pressures. We still expect another forceful (50bp) response in February.
Monday Morning Musings
- We are re-introducing two regular posts, Monday Morning Musings and Friday Market Thinking to book-end the week, on the basis that regular postings are appreciated by readers, as well as providing a good discipline for ourselves.
- Other posts will continue obviously. The idea of ‘Musings’ is that while none of the following might merit a full post of their own, they might perhaps add up to some interesting observations (of sorts).
- This week, it is all back to ‘normal’ as Davos man hops on a Private Jet and returns to their snowy ancestral home to talk once again about climate change and world poverty for the World Economic Forum.
What’s Working on the Short Side?
- Over the past 30 days, the best shorts underperformed the universe by -19.5%, (-19.1%, vs. 0.4%, ) Compared to the universe, they
- Were $1,889mn smaller cap, had 57% higher beta, had higher long term forecast earnings growth,
- Had higher next 12M sales growth yet had lower next 12M EPS growth,
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