Daily Brief Thematic (Sector/Industry): China & HK Strategy: What to Grab? and more

• With the HSI surging 21.2% since 24 Sep and many stocks have even doubled, the strategy in the HK and China markets will move to chase the laggards.
• Among the underperforming HSI constituents, China Resources Power (836 HK) and China Mobile (941 HK) are the better candidates to pick up performance. 
• For HSCEI, Zijin Mining Group Co Ltd H (2899 HK) and China Shenhua Energy Co H (1088 HK) have lagged but their stories are interesting and should regain momentum.

• U.S. stocks edged lower Thursday as investors remained cautious ahead of Friday’s crucial jobs report, with the S&P 500 dropping 0.2%
• Bank of Japan board member Noguchi suggests further interest rate hikes should be slow and cautious to protect the economy
• UBE announced its largest-ever acquisition, buying LANXESS’s urethane business for €460 million (¥73.6 billion).

• Something remarkable has happened in the department store sector. A year ago, both big city stores and those in the regions were all still well behind sales levels in 2010. 
• But stores in the largest 10 cities exceeded 2010 sales levels by 2% last year. Emphasising the yawning gap, regional stores extended their losses with sales down 42% on 2010.
• The elite have also suddenly started making money. A lot of it. We now have a (very profitable) luxury retail sector and a (poor returning) middle-market general merchandise store sector.

• The packaging sector is making a comeback as key material spreads have been rising  which is being reflected in Q1FY25 results of the companies.
• What makes this sector more interesting is certain promoters of these companies are buying share of the company from the open market along with fund infusion by some big investors
• The biggest risk remains for the sector is pricing pressure and demand-supply mismatch but it seems bottom is being made for the sector

• Big move higher for oil set to spike the JP oil major Inpex although the refiners have large outstanding short interests and may squeeze
• The higher oil price is negative for Japan’s utilities which have yet to restart reactors and are dependent on oil/gas imports to fuel their thermal generation
• Details are limited on a potential Seven Bank stake sale by 7&I, but there should be room for upside as shorts continue to cover

• Announcement of a free resource for money miners in the lithium space
• Discussion about upcoming quarterly season and potential moves by Gina in Lion Town
• Consideration of cash burns, balance sheet pressure, and potential takeover scenarios in the mining industry

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